India Might Ban Bitcoin and Ether to Boost its CBDC

• India plans to ban cryptocurrencies like Bitcoin and Ether and promote its CBDC, the digital rupee.
• The government’s plan has raised concerns over the future of WazirX, especially regarding its $230M hack.
• The regulators’ opposition to cryptocurrencies is primarily based on the inherent risks of virtual assets.

The Indian government is exploring a ban on privately-operated cryptocurrencies like Bitcoin and Ether. As part of the country’s digital finance plans, India intends to promote its central bank digital currency (CBDC), the digital rupee. India’s skeptical approach to crypto has raised concerns about the future of WazirX, especially after its recent $230 million hack.

India’s strategy focuses on tackling the risks associated with virtual assets. The government views the digital rupee as a way to mitigate these risks while gaining the benefits of cryptocurrencies. A government official stated, “CBDCs can do whatever cryptocurrencies do, but without the risks.” Officials are optimistic about the CBDC’s potential to address the challenges of financial innovation without compromising economic stability. This move has prompted discussions about India’s future digital economy as it adopts the so-called safer state-backed asset.

Crypto Ban’s Impact on WazirX

Crypto influencer Zia ul Haque posted on X, highlighting the impact of the Indian government’s potential crypto ban on WazirX. The crypto exchange suffered one of the largest crypto hacks in India, resulting in a loss of around $230 million. After the incident, WazirX released a day-wise report on the hack, detailing the affected 240,000+ wallets.

Read also: Binance Helps Delhi Police Bust Crypto Scam in India

This potential government ban has created anxiety and uncertainty. According to Haque, India has always had a negative outlook on crypto, imposing 30% taxes and 1% TDS. A blanket ban on crypto would leave the community vulnerable, particularly regarding WazirX customer reimbursements.

Although reports state that most regulators in the country support the ban on cryptocurrencies, the institutions involved in the discussion are unknown. These regulators oppose cryptocurrencies primarily due to the risks of virtual assets. However, the government has not made any official announcements on the matter.

Ajay Seth, India’s Secretary of Economic Affairs, previously mentioned the possible release of a policy paper on crypto by the inter-ministerial group that includes the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).

Although announced in July with a September release date, the paper is still unpublished. The delay has fueled concerns about India’s stance on crypto regulation. If passed, the proposed bill would ban cryptocurrencies and introduce strict policies.