Indian PM Narendra Modi Seeks Collaborative Effort for Crypto Regulations, CBDC Pilot Likely by Q1 2022
On November 18, at the Sydney Dialogue, Indian Prime Minister Narendra Modi said that all democracies must work together and ensure Bitcoin and other crypto-assets doesn't end up in the wrong hands, which can “spoil our youth”. He said, It is essential for democracies to work together. It should also recognize national rights and promote trade, investment and larger public good." These comments arise among discussions to formulate India's policy on private virtual currencies and India's success in the Digital sector and Artificial Intelligence.
The Prime Minister also urged democracies including "India, Australia and our partners in the Indo-Pacific region and beyond" to invest together in future technologies to "deepen intelligence and operational cooperation and develop common standards for data governance and cross border flow of data."
According to some reports, the GOI (Government Of India) is attempting to regulate cryptocurrencies as an asset class and exclude their use in the payment sectors. The country in the past had a very dicey relationship with digital currencies. A few years back in 2018, India effectively banned crypto transactions, but just two years later, in March 2020, the apex court overturned the restriction.
In the last few months, there have been continued proposals to impose stricter laws for transactions in virtual coins as an unregulated ecosystem could be a catalyst and drive significant domestic household savings towards decentralized crypto.
The RBI (Reserve Bank of India) is opposed to private virtual currencies. As the governor of RBI, Shaktikanta Das stated that the "country needs much deeper discussions on the issue of cryptocurrencies". Same time the RBI expects to launch the pilot for the country's own Central Bank Digital Currency (CBDC) latest by the first quarter of next year.
P. Vasudevan, chief general manager at the Department of Payment & Settlement of the RBI, said, "I think somewhere it was said that at least by the first quarter of next year, a pilot could be launched. We are bullish on that," at the State Bank of India's Banking and Economic Conclave.
Vasudevan mentioned the RBI is on the lookout for the various issues and nuances related to CBDC like distribution and validation mechanisms and potential targets – wholesale/retail. He said that the process is complicated and cannot be launched in the blink of an eye. Mainly when the authorities consider that India's CBDC could play a vital role in further leading the country into web3 with innovative and digitized financial systems.
At last, Vasudevan added, "The central bank is also checking if intermediaries can be bypassed altogether, and most importantly, checking if the technology should be decentralized or should be semi-centralized,". He explained the efficacy of a CBDC depends on how its implemented. "It's not a simple thing to just say that CBDC can be a habit from tomorrow on."