The Reserve Bank of India (RBI) is introducing new features to improve the accessibility and usability of its central bank digital currency (CBDC), the e-rupee. This move comes amidst India’s strict stance on the broader cryptocurrency industry.
The RBI’s plan includes adding offline transaction capabilities and programmability to the e-rupee, marking a significant leap for the digital currency. These features, set to roll out gradually through pilot programs, aim to revolutionize how retail users interact with the e-rupee. The proposed programmability feature will allow government agencies to ensure precise disbursement of benefits and enable companies to streamline expenses such as business travel.
Industry Response and Expectations
Sharat Chandra, co-founder of India Blockchain Forum, sees potential benefits in compensating employees using the CBDC and suggests incorporating toll tax collections to further encourage adoption.
As India’s 2024 budget approaches, the crypto industry is anxious. Heavy taxation and regulatory uncertainties have made the past year challenging for investors and exchange owners.
Industry players hope for a reduction in the 30% tax rate on virtual assets, which has led to India being labeled as one of the world’s most heavily taxed crypto markets.
India’s Regulatory Crackdown on Offshore Exchanges
In December 2023, India’s Financial Intelligence Unit issued notices to nine major offshore crypto exchanges for non-compliance with AML laws. This led to the removal of their apps from Apple’s App Store in India, including Binance, Kraken, and Huobi.
This crackdown is part of a broader regulatory push requiring crypto exchanges to register under the Prevention of Money Laundering Act, prompting Indian firms to relocate to the UAE, particularly Dubai, due to its more accommodating regulatory framework.