India Releases Concept Note on CBDC as it Plans Next Phase

The idea of a central bank-controlled digital money dubbed Central Bank Digital Currency (CBDC) has continued to gain traction in several nations of the world.

This time, India takes its desire for a national digital currency dubbed the digital Rupee to the next phase with the release of a concept note.

Earlier in the year, the RBI had shared plans to implement the digital rupee through a staged approach.  The regulator proposed introducing the CBDC by going step by step through stages of Proof of Concept, pilots, and then the actual launch.

The 50-page concept note aimed at creating awareness, details important features and considerations for the digital rupee that includes possible use cases, technology, and issuance mechanism.

Features of the Indian CBDC (digital rupee)

According to the concept note, the digital rupee will be an addition to the current forms of money available. Except for being cheaper, faster, and easier, it is no different from a banknote.

Also with the digital rupee, RBI hopes to improve financial inclusion as well as make its payments system more efficient.

While stressing the inherent risks associated with dealing with cryptocurrency, the RBI touts its digital money as risk-free digital money offering users the same privileges of dealing with digital currency without the risk involved.

Interestingly, the RBI is still undecided on whether to operate a controlled database or maintain a distributed ledger technology for its CBDC as it is open to integrating the advancement of the technology.

Although there was no definite timeline, the RBI said it will begin pilot testing for the digital rupee soon adding that the results of this pilot test will be included in its final designs.

India and the crypto industry

Despite its regulatory uncertainties and not-so-friendly tax regime, India has massive potential in the crypto industry according to KuCoin CEO.

Also, a group of Indian blockchain influencers recently announced an advocacy group called the Indian Blockchain Forum (IBF). The group was created with the intent of making India a web3.0 global hub.

Recall that the Indian government imposed a 30% tax on earnings made by digital asset investing that became effective in April.