As a seasoned crypto investor with a decade-long journey through the digital jungle, I’ve seen the landscape evolve from a wild frontier to a more regulated playground. The ongoing debate about India’s stance on CBDCs and cryptocurrencies is like watching two chess masters strategize their next moves – intriguing, complex, and full of potential for unexpected twists.
Discussions about the regulatory stance towards cryptocurrencies and central bank digital currencies in India are ongoing and sparking debates. Some recent talks hint that central bank digital currencies might hold an advantage compared to “privately issued cryptocurrencies.
In a post on October 23rd, Sumit Gupta, the joint founder and chief executive officer of CoinDCX, expressed his viewpoint that Central Bank Digital Currencies (CBDCs) and digital currencies such as Bitcoin (BTC) serve distinct functions and thus, should not be considered rivals.
His post prompted responses from the crypto community, with some warning that CBDCs could resemble “digital fiat,” potentially carrying the same inflationary risks as traditional currencies.
In shaping its regulations for cryptocurrencies, India must find a harmony between ensuring safety and fostering innovation. This delicate balance could significantly impact India’s position within the international digital economy.
CBDCs vs. cryptocurrencies
As a researcher delving into the fascinating world of digital currencies, I find myself in agreement with Gupta’s perspective. During my conversation with CryptoMoon, he expressed his belief that Central Bank Digital Currencies (CBDCs) and cryptocurrencies are both valuable, but they play distinct roles.
“CBDCs are issued centrally by the nation’s central bank, which ensures complete control over their issuance, supply and usage.”
Gupta pointed out that centralizing control facilitates a more efficient execution of monetary policy, resulting in improved handling of inflation, cash flow, and interest rates.
Nevertheless, there are some individuals who remain unconvinced. In a recent conversation with CryptoMoon, Jack Booth – co-founder of TON Society – expressed concerns about CBDCs, stating they represent the most significant threat to self-sovereignty. He also emphasized that public confidence in governments is currently at all-time lows.
“Public trust in governments, especially in Western countries, is at its lowest level ever. The introduction of CBDCs, which would give unelected officials complete authority over your funds, would only worsen the existing problems that prompted and fueled the development of Bitcoin many years ago.”
Risk of banning cryptocurrencies
India has been discussing a potential ban on privately issued cryptocurrencies, but Gupta opines that the nation might still be receptive to financial technology advancements.
“Various Web3 reports have indicated that with over 75,000 core Web3 talents and more than 450 Web3 startups in India, implementing a ban could stifle the entrepreneurial spirit and hinder advancements in blockchain technology.”
Gupta pointed out that the regulatory structure in India allows cryptocurrency trading platforms to abide by the rules set by the Financial Intelligence Unit (FIU) and the country’s tax system.
In March, it became evident that the Supreme Court of India overturned the Reserve Bank of India’s (RBI’s) prohibition against banks engaging in transactions related to cryptocurrency companies.
Striking the regulatory balance
As an analyst, I strongly advocate for the Indian government to establish a fair competitive landscape, one that mandates adherence to the nation’s legal framework by all parties involved.
“Unfortunately, there are still players which are not compliant on various parameters […] taxation still remains high on our agenda. Time and again, various reports have established that taxation drove a lot of users to offshore platforms.
Gupta expressed his expectation for a reduction in taxes, as he believes the implementation and oversight has been strengthened, primarily through efforts under the Prevention of Money Laundering Act (PMLA).
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2024-10-27 14:40