India plans to ban bitcoin because “CBDCs have more advantages”
The Indian government is considering banning cryptocurrencies such as bitcoin (BTC) and ether (ETH), according to sources from institutions and regulators in that South Asian country. The main reason is that Central Bank Digital Currencies (CBDC) can offer “similar advantages” in profit transfers, but without the “risks” associated with cryptocurrencies.
According to sources close to the government, consultations have been held prior to the preparation of a discussion document. The general consensus indicates that the risks of cryptocurrencies, including stablecoins, They far outweigh its benefits.
“CBDCs can perform the same functions as cryptoassets. In reality, CBDCs offer more advantages without the risks that private cryptocurrencies entail,” said an anonymous official, according to local media Hindustan Times.
The official also questioned the stability of stablecoins, which are cryptocurrencies linked to assets such as fiat money or gold.. The government’s final decision will be made after wider consultations.
India is currently a territory leader in cryptocurrency adoption according to Chainalysis. According to their report, in that country there is significant awareness about BTC and the cryptoasset sector, with several million permanent users.
On the other hand, the country’s interest in CBDCs is not new. Recently, Shaktikanta Das, governor of the Reserve Bank of India (RBI), highlighted in a conference that “the programmability feature of the CBDC could serve as a key enabler for financial inclusion.”
India is also one of the most advanced countries in developing its CBDC, known as the digital rupee. Launched in November 2022 for the wholesale segment, and in December for the retail segment, it already counts with more than 5 million users and 16 participating banksaccording to data from its central bank.
CBDCs: surveillance and control tools
CBDCs, essentially tokenized fiat money, have been rated by the cryptocurrency community as vehicles for financial surveillance and control. In Colombia, Alberto Boada, secretary of the Bank of the Republic, has expressed that CBDCs have a way to go and are “the Big Brother that does not guarantee privacy.”
In Brazil, researchers have determined that CBDCs will allow authorities absolute control over the balances of users of the digital real, the tokenized version of the national currency in developmentas reported by CriptoNoticias.
Despite the Indian bank’s allegations, it is noteworthy that there are institutions that consider that bitcoin cannot compete with CBDCs. For the government of Colombia, for example, There are no sufficient reasons for the issuance of a central bank digital currency. This is because there are many difficulties that the creation of this type of currency in the country would entail, while the benefits can be obtained in other ways.
They thus accept the great progress achieved by the cryptoasset sector worldwide, “permeating both emerging and developed economies.” In contrast, Indian officials believe that CBDCs have immense possibilities both domestically and in cross-border transactions. Therefore, the government plans expand the scope of CBDC gradually after analyzing data from ongoing pilot projects. However, the discussion on the ban of cryptocurrencies remains open, reflecting a tension between technological innovation and state financial control.
This article was created using artificial intelligence and edited by a human Editor.