Developments surrounding crypto and blockchain in India have led the country to create some directives and at the same time find a way to establish its own controlled medium of cryptocurrency.
Since the central bank's announcement that it has issued its own digital currency in India, the 'Digital Rupee', many citizens have wondered how and when its implications.
Yesterday an anonymous government source provided information on the same. According to the source, the 'digital rupee' that the central bank - the Reserve Bank of India - issues will be numbered in units. The process will be similar to how fiat currencies in the country are issued with a unique number.
Expanding the same the source stated:
“Units issued in digital rupees would be included in the currency in circulation. It wouldn't be much different from fiat currency. It would be more like an electronic form of fiat currency, so in a sense it would be a government-enforced electronic wallet ”.
In this way, not only will the government be able to track every transaction that takes place using CBDCs, but also create an ecosystem of blockchain and crypto technology that the government says could provide "a boost to the Indian economy".
Just last month together with the CBDCs, the Minister of Finance and Corporate Affairs, during the budget meeting for 2022-23, announced a 30% tax on cryptocurrency-based income.
Additionally, a 1% TDS was also imposed on payments beyond a certain threshold, in order to track such high-value cryptocurrency transactions.
Less than a week ago, a petition was launched to counter the imposition of the 30% tax on cryptocurrencies, stating that taxation, similar to that of betting and gambling, puts cryptocurrencies in the crosshairs of cynics. And that “it could have a devastating impact not only on the industry itself but on the economy as a whole”.
CBDC around the world
Recent developments surrounding CBDCs around the world are making it clear that the next big target for many governments would be digital currencies as this would allow them to be a part of the growing crypto space without directly affiliating with existing private cryptocurrencies.
A few days ago the Federal Reserve Bank of Boston (Boston Fed) and the Massachusetts Institute of Technology (MIT) released the results of their Phase 1 of their multi-year research focused on CBDC - Hamilton Project.
And the researchers found that "existing database and distributed systems technology is sufficient to provide a more traditional payment architecture for CBDC."
Additionally, the Bank of Jamaica also recently announced that the central bank will go ahead with the release of their digital currency in Jamaican dollars in the first quarter of 2022.