India is proposing to develop a digital version of the rupee, making it the latest nation to enter the race to create government-backed virtual currencies.
According to Indian Finance Minister Nirmala Sitharaman, the country’s central bank plans to launch the currency “using blockchain and other technology” sometime in the next fiscal year, which starts in April.
Sitharaman said the digital rupee will “provide a tremendous boost to the digital economy” as she presented India’s annual budget to parliament on Tuesday. She would not provide any other information regarding the launch, including how extensively a digital rupee may be utilized at first or what effect it might have.
Since Prime Minister Narendra Modi withdrew the country’s two largest rupee bank notes in late 2016, digital payments have exploded in popularity in India. Apart from local competitors like Paytm, several of the world’s largest internet corporations, including as Google (GOOGL) and Facebook (FB), have jumped on board India’s cashless payments craze.
Other big economies are moving through with their own plans to introduce virtual versions of their own currencies as well. For the last two years, China has been testing its digital yuan in key cities. Athletes, officials, and media attending the Beijing Winter Olympics this month have just three payment options.
Both Europe and the United States have been looking at the possibility of a digital euro and digital dollar, while both have emphasized the significance of minimizing the financial risk that any e-currency poses.
For years, India has voiced worry about cryptocurrencies and how to effectively manage digital assets, even toying with a crypto ban at times. Last year, a cryptically phrased proposal on the Indian parliament’s website claimed that the government was considering “prohibiting all private cryptocurrencies in India.”
The central bank has raised fears that cryptocurrency may be used for money laundering and terrorist financing on several occasions.
Cryptocurrencies are not prohibited.
Sitharaman said in her statement on Tuesday that the government is eager to continue to allow crypto trading in the nation, but with certain restrictions. She said that the Indian government will levy a 30% tax on virtual digital asset profits.
“Transactions in virtual digital assets have increased dramatically,” Sitharaman added. “Because of the scale and frequency of these transactions, a particular tax structure is required.”
India’s crypto investors breathed a sigh of relief after Sitharaman’s statements, which industry analysts saw as a hint that Asia’s third biggest country will not outlaw virtual currencies.
On Tuesday, Nischal Shetty, the creator of cryptocurrency platform WazirX, tweeted, “Hope to see a lessening of crypto ban anxiety in India.” “There’s a lot to understand here, but altogether, this is a huge step forward for India’s crypto industry.”
Since the outbreak of the epidemic, Indians have been more interested in virtual currencies. While the government does not track statistics on how many individuals trade cryptocurrencies, media sources quoting industry experts have estimated that the nation might have as many as 20 million crypto investors.
“The taxation of virtual digital assets, or crypto, is a positive move. It provides the sector with much-needed clarity and confidence “Sumit Gupta, the co-founder of CoinDCX, India’s first crypto unicorn, stated as much.