As India gears up to introduce its own digital currency, backed by the Reserve Bank of India (RBI), government officials have voiced reservations about independent cryptocurrencies like Bitcoin.
During a visit to Qatar, Commerce Minister Piyush Goyal announced that India is on the verge of launching its RBI-supported digital currency, according to a report by The Hindu news agency. This initiative aims to revolutionize financial transactions.
In related news, the RBI is reportedly set to pilot a deposit tokenization program starting Wednesday. Suvendu Pati, the RBI’s chief general manager of the fintech department, shared details of the upcoming trial.
Reuters reports that the RBI’s deposit tokenization pilot will likely leverage the wholesale segment of India’s central bank digital currency (CBDC) as its underlying framework. Several Indian banks are expected to participate in this collaborative effort.
Beyond Stablecoins and CBDCs
Commerce Minister Goyal emphasized that India’s forthcoming digital currency, with the RBI’s backing, seeks to simplify transactions and provide a faster, more transparent alternative to traditional banking systems.
The minister reportedly expressed opposition to an RBI-backed stablecoin project, asserting that the new system will facilitate transactions “more easily and efficiently.”
“This initiative will streamline transactions, reduce paper usage, and offer quicker processing compared to traditional banking,” the minister stated. He added that blockchain technology will underpin the system, enhancing transparency and aiding in the fight against illicit activities.
Cryptocurrency: Taxed, but Not Endorsed or Discouraged
While presenting the RBI’s new digital currency project, Minister Goyal conveyed a degree of skepticism towards cryptocurrencies like Bitcoin 
BTCUSD, noting that these assets lack a “back end guaranteeing any value.”
“We are not encouraging cryptocurrencies that lack sovereign backing or asset backing,” the minister reportedly clarified. However, he emphasized that India hasn’t prohibited cryptocurrency trading, adding:
“Imagine a scenario where there are no buyers; there’s no guarantee. Engaging in such activities is at your own risk and expense. The government neither promotes nor discourages it; we simply apply taxes.”
Goyal’s comments came after Bitcoin, the leading cryptocurrency by market capitalization, reportedly reached a new peak above $126,000 on Monday, according to Coinbase data.
The RBI has consistently expressed caution regarding cryptocurrencies, engaging in extensive deliberations about a potential complete ban on crypto transactions in the past.
The central bank launched its wholesale CBDC initiative, the digital rupee, in late 2022, with the aim of improving interbank settlements by lowering transaction costs.
Cointelegraph has reached out to the RBI for comments regarding its new digital currency and tokenization programs but had not received a response at the time of this publication.