India has joined a growing group of countries introducing central bank digital currencies (CBDCs).
In the Union Budget 2022-2023, the Finance Minister has announced that the country will have its digital rupee backed by the blockchain and it will begin a phased rollout of the currency this financial year.
Blockchain Assets Review spoke to industry insiders and here is what they had to say about the digital rupee and it drew a mixed response.
While industry insiders see a lot of potential in the concept, some are still doubtful of the timely implementation of such a digital currency.
Aliasgar Merchant, a developer relations engineer at blockchain firm Tendermint, said, “The introduction of ‘Digital Rupee’ or CBDC is definitely a positive move” however, it also raises “some concerns and questions.”
Merchant noted that given the Reserve Bank of India’s (RBI) past record on technological implementation, the timely rollout of CBDC is a “matter of concern.”
Furthermore, he said that the RBI’s centralized hold over the currency defies the purpose and applications of a decentralized currency.
Another negative impact, Merchant said, is that “we do not know what kind of data the banks will gather from the people who use them, whether there would be a limit to how much one person can withdraw or deposit if there will be different transaction limit for individuals and businesses.”
“In addition, if a fraud is uncovered after the launch of CBDC, any wrongdoings will be attributed to the RBI,” he said, adding that having such a centralized authority is always risky.
Jay Hao, chief executive of global exchange OKX, appreciated that India is joining a growing list of countries in introducing CBDCs. However, he said that the country is slightly lagging behind in the digital currency race mainly due to the regulatory hurdles and reluctance in accepting the growing popularity of digital assets around the world.
“I hope the announcement made by Finance Minister regarding CBDC is implemented without any further delay as it will give a much-needed push to the blockchain industry in India,” Hao added.
Anndy Lian, chairman of BigONE Exchange, said, “The digital rupee is not an easy task for India. India is a big economy and may need to exercise more control over its currency before adopting it to its fullest scale.”
Potential security issues can be a problem at the start and experts should look deeper into the direct and indirect costs potentially linked to the implementation, he added.
While the announcement has made experts raise questions, many still trust the future of CBDCs in the country.
Charles Tan, head of marketing at Coinstore, said: “The digital rupee launch by RBI is a very interesting development as it makes the RBI’s stance on digital assets crystal clear,” he said.
India is moving from an unregulated space to a government-monitored crypto market, which will benefit all the stakeholders of the industry, he said.
Shivam Thakral, CEO of BuyUcoin, a homegrown cryptocurrency exchange said, “RBI has always been ambitious with its CBDC launch. The launch of CBDC by RBI will catalyze the growth of blockchain infrastructure in India and will encourage more entrepreneurs to join the blockchain revolution.”
Interestingly, Thakral noted if RBI allows the trading of CBDC on private exchanges, it will add a new dimension to public-private partnership in the country’s fintech space.
“The launch of RBI’s CBDC will prove to be a momentous occasion for the digital asset industry as it will create a government-approved market for the launch of new/existing digital assets,” he added.
Nischal Shetty, founder and chief executive of crypto exchange, WazirX, is bullish and called the news a ‘phenomenal’ one and said that the country is on the path to legitimizing the crypto sector.
“India launching a blockchain-powered Digital Rupee is phenomenal news. This move will pave the way for crypto adoption and put India in the front seat of innovation,” he told Blockchain Asset Review.
Sumit Gupta, co-founder & chief executive of crypto exchange, CoinDCX, said: “Introduction of CBDC sends a clear signal of India being a digital-first, efficiency-driven, and transparency-led system. CBDC with the backbone of blockchain will help us hold a powerful position in the global economy.
“We welcome the move and congratulate the govt for this visionary move,” he added.
Pratik Gauri, founder and chief executive of the blockchain firm 5ire noted that digital currency will open up great opportunities for innovation and foreign investment.
Raj Kapoor, founder of India Blockchain Alliance and chief growth officer at Chainsense Ltd, said: “The introduction of a digital currency in the next financial year using blockchain and other supporting technology validates not just the technology but also the intent to give a big shot in the arm for the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system.”
In the budget announcement, Finance Minister Nirmala Sitharaman said that the introduction of a central bank digital currency will give “a boost, a big boost to the digital economy,”
“Digital currency will also lead to a more efficient and cheaper currency management system,” she said.
Countries all over the world are increasingly introducing digital currencies. Jamaica has also recently announced that it will roll out its national digital token in the first quarter of the year to reduce transaction costs and offer financial services to citizens who do not otherwise use banks.
Eastern Caribbean nations including Grenada, Saint Lucia, Antigua, and others launched a digital currency in 2021 called DCash while Japan, China, and the United States are also reportedly exploring the possibility of launching CBDCs.
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.
Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.