India’s regulatory position on cryptocurrencies and central bank digital currencies continues to fuel debate, with recent discussions suggesting CBDCs could have an edge over “private cryptocurrencies.”
In an Oct. 23 X post, Sumit Gupta, the co-founder and CEO of CoinDCX, argued that CBDCs and cryptocurrencies like Bitcoin (BTC) serve different purposes and “shouldn’t be viewed as competitors.”
His post prompted responses from the crypto community, with some warning that CBDCs could resemble “digital fiat,” potentially carrying the same inflationary risks as traditional currencies.
As India shapes its approach to crypto regulation, striking a balance between security and innovation will likely influence its role in the global digital economy.
Related: India’s crypto tax is a gov’t attempt to ‘displace’ the tech — Lawyer
CBDCs vs. cryptocurrencies
In an interview with Cointelegraph, Gupta said he believes both CBDCs and cryptocurrencies are valuable but serve different roles:
“CBDCs are issued centrally by the nation’s central bank, which ensures complete control over their issuance, supply and usage.”
Gupta added that “this centralization enables effective implementation of monetary policy, allowing for better management of inflation, liquidity and interest rates.”
However, some remain skeptical. In a recent Cointelegraph interview, Jack Booth, co-founder of TON Society, said, “CBDCs pose the greatest danger to self-sovereignty,” adding that public trust in governments is at historic lows:
“Public trust in governments, especially in Western countries, is at its lowest level ever. The introduction of CBDCs, which would give unelected officials complete authority over your funds, would only worsen the existing problems that prompted and fueled the development of Bitcoin many years ago.”
Related: AI risks financial stability, warns Indian central bank governor
Risk of banning cryptocurrencies
India has debated banning private cryptocurrencies, but Gupta said he believes the country is open to fintech innovation:
“Various Web3 reports have indicated that with over 75,000 core Web3 talents and more than 450 Web3 startups in India, implementing a ban could stifle the entrepreneurial spirit and hinder advancements in blockchain technology.”
Gupta highlighted that India’s regulation has enabled crypto exchanges to comply with Financial Intelligence Unit (FIU) guidelines and tax frameworks.
This shift could be seen in March when the Supreme Court of India struck down the Reserve Bank of India’s (RBI) ban on banks’ dealings with crypto-related firms.
Related: Supreme Court of India YouTube channel hijacked to shill XRP
Striking the regulatory balance
Gupta urged the Indian government to “ensure a level playing field where all participants follow the law of the land:”
“Unfortunately, there are still players which are not compliant on various parameters […] taxation still remains high on our agenda. Time and again, various reports have established that taxation drove a lot of users to offshore platforms.
Gupta said he hopes that “relief is given on taxation” since the establishment of compliance and monitoring, which he says is being “driven through PMLA [Prevention of Money Laundering Act] initiatives.”
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