The Indian government may have ditched plans to launch its own state-backed digital currency. According to a new report, India’s Central Bank RBI has dropped its plans of launching a cryptocurrency since the government feels that it is too early to think about a nationalised digital currency.
Last year, after restricting cryptocurrency trading in the country through a circular, the RBI has stated its intention of launching a Central Bank Digital Currency (CBDC). RBI had thought of launching the cryptocurrency as a way to curb money laundering, cyber-security threats and concerns over illicit money.
But it is good to see the RBI making a U-turn on its plans for a CBDC. The way they have handled cryptocurrency regulations in India clearly shows that they are not equipped with the knowledge to effectively govern cryptocurrencies, leave alone launching a state-backed crypto asset.
Moreover, we may still be far away from cryptocurrency regulations in the country. The government responses to questions on cryptocurrencies in the Lok Sabha recently showed that the Indian regulators still do not understand the functioning of this new financial innovation.