Last Updated on Feb 1, 2022 by Manonmayi
Starting in 2022-2023, the Reserve Bank of India (RBI) will issue a new digital rupee based on blockchain technology, FM Nirmal Sitharaman made the announcement today during the Union Budget 2022.
Blockchain technology is also used to power cryptocurrencies and non-fungible tokens (NFTs), and it is a real-time distributed ledger. The transaction records on a blockchain cannot be modified, and the ledger is transparent and legitimate, which is why it’s employed in cryptocurrencies.
In the meanwhile, the government has stated that any revenue generated through the transfer of digital assets would be taxed at a rate of 30%. This will have an influence on gains from bitcoin and non-ferrous metals, both of which have enjoyed recent growth in India.
“Digital money would also lead to a more efficient and cheaper currency management system. As a result, it is suggested that the Reserve Bank of India produced digital rupees utilising blockchain and other technology beginning in 2022 and 2023”, says Sitharaman during the Budget 2022 session in the Parliament.
The central bank digital currency (CBDC) is a digital version of fiat currency supported by blockchain and governed by the central bank. CBDC is distinct from decentralised virtual currencies and crypto assets, which are not issued by the government and do not have the status of “legal tender”. It allows users to make domestic and cross-border transactions without the involvement of a third party or a bank.
The decision comes as the Indian government prepares to submit a bill prohibiting ‘all private cryptocurrencies in India’ with ‘limited exceptions’.
The launch of a digital currency will not be limited to India. Nigeria established eNaira, a non-interest-paying CBDC, in October 2021. CBDCs have also been established in the Bahamas and five additional East Caribbean islands.