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India is contemplating a ban on private cryptocurrencies such as Bitcoin to bolster its central bank digital currency, the digital rupee. While regulators cite security benefits, CoinDCX CEO Sumit Gupta argues that cryptocurrencies and CBDCs serve different purposes and can strengthen the financial system together.
India's Potential Ban on Private Crypto Raises Concerns
India may soon outlaw private cryptocurrency, according to a new article in the Hindustan Times. Despite the advantages of CBDC, the regulators allegedly made this choice due to the hazards connected with private crypto.
Significantly, the digital rupee, the country's CBDC, has been in pilot since November 2022 and is seeing increasing adoption in the wholesale and retail sectors. According to the unidentified source referenced in the paper, the CBDC has the potential to provide similar benefits to private cryptocurrencies such as Bitcoin. In addition, it has the potential to offer enhanced security without the usual drawbacks.
CBDC Adoption Grows as Security Benefits Highlighted
Additionally, the government has reportedly conferred with industry experts on the matter. The experts agreed that CBDCs facilitate financial inclusion, which in turn makes it simpler to provide disadvantaged groups with targeted funding, Coingape notes.
The programmability of CBDCs has the potential to revolutionize the distribution of targeted subsidies, according to RBI Governor Shaktikanta Das. In addition, CBDC's utilization of blockchain technology has the potential to improve other areas, such as targeted lending, government securities, and more. It should be noted that the RBI Governor has already brought attention to the dangers of cryptocurrency and is a strong advocate of CBDCs.
Ongoing Consultations Before Finalizing Crypto Ban
Still, the crypto ban has not been decided upon in its entirety. At this time, the government is taking advice from specialists and looking at results from the CBDC trials that are still running.
The G20's decision to adopt the IMF-FSB synthesis document has also an impact; the study recommends that governments crack down on cryptocurrency, going so far as to propose outright bans if they think it's essential.
CoinDCX CEO Urges for Coexistence of Crypto and CBDCs
There have been some analogies drawn between CBDCs and private cryptocurrencies, and CEO Sumit Gupta of CoinDCX, a leading Indian crypto exchange, commented on the matter lately. In his reaction to the Hindustan Times story, he disputed the claim that CBDCs could eventually supplant or even surpass Bitcoin and other cryptocurrencies.
The two digital assets, he stressed, have distinct functions but can work well together. Cryptocurrencies provide additional advantages like decentralization, wider market access, and innovation, whereas CBDCs zero in on particular government-driven functions like financial inclusion, says Gupta.
At the same time, he begged Indian authorities to put aside jealousy and consider how the two technologies may complement one another to fortify the country's banking sector. In addition, the CEO of CoinDCX emphasized the significance of continuing conversations to build a strong financial ecosystem that utilizes both cryptocurrencies and CBDCs.
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