India's Evolving Stance on Cryptocurrency: A Potential Shift Towards Engaging with Stablecoins
UPSC Relevance
Prelims: Indian Economy (Money and Banking, Reserve Bank of India - RBI, Digital Currency, Capital Account Convertibility); Science and Technology (Cryptocurrency, Blockchain).
Mains:
General Studies Paper 3 (Economy & S&T): Indian Economy and issues relating to mobilization of resources; Science and Technology- developments and their applications and effects in everyday life; Awareness in the fields of IT, Computers; Challenges to internal security through communication networks (related to terror financing, money laundering).
Key Highlights from the News
India's Finance Minister Nirmala Sitharaman has indicated a potential shift in India's cryptocurrency policy.
She stated that countries should be ready to engage with new technologies like Stablecoins, otherwise, they risk isolation from the global financial order.
Stablecoins are a type of cryptocurrency that aims to maintain price stability by being pegged to an underlying asset like the dollar or gold.
Currently, the government and the Reserve Bank of India (RBI) have been skeptical of private cryptocurrencies. The RBI had called for a complete ban on them.
Although crypto transactions in India are taxed transactions, they do not have legal recognition.
As an alternative to private cryptocurrencies, the RBI is experimenting with its own Central Bank Digital Currency (CBDC) (Digital Rupee).
The Finance Minister's new statement indicates that the government may adopt a more open approach to this issue.
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