RBI Digital Rupee | Digital Rupee By RBI – All you need to know about the Official Digital Currency of India
RBI Digital Rupee: The Union Budget 2022-23 has brought some positive news for the Crypto community in India as well as the world. The budget has proposed Taxation on the profit of any Crypto asset up to 30% and 1% TDS at any transfer. The introduction of taxation on Crypto is the first step towards the regulation of Cryptocurrency and Digital assets, which shows the positive attitude of the Government regarding Cryptocurrency and Blockchain technology.
Honorable finance minister Nirmala Sitaraman also mentioned in the Union Budget 2022-23 that, RBI will introduce a Digital Currency based on blockchain technology termed CBDC- The Central Bank Digital Currency between 2022-2023. Which would be India’s first Digital Rupee having “Legal Tender” status.
What is CBDC?
CBDC stands for Central Bank Digital Currency, a digital currency issued by the central bank (Reserve Bank of India). This would be a legal tender like general money in digital format.
The investors can exchange fiat currency (rupee) with CBDC and visa-versa. At present, digital currencies available in the market (Crypto Exchanges) are not regulated by any central bank. But CBDC will be regulated, and that is a great difference.
The RBI will launch CBDC in the next financial year, and it will be backed by blockchain technology.
How useful would be CBDC?
This is a very common question that would be in everyone’s mind. CBDC or Digital Rupee will be completely regulated by RBI and it would be a legal tender like conventional rupee. Current un-regulated digital currencies like Bitcoin, Ether, USDT don’t have legal tender value.
CBDC will provide users with good convenience and security of digital as well as the regulated, reserve-backed circulation of the traditional banking system.
Presently, when investors invest in digital coins, they are not confirmed about their future – as they are not legal tender. With this new CBDC, investors can own digital coins backed by the RBI.
Digital Rupee or CBDC will reduce printing costs for the Reserve Bank of India and will also be a cost-efficient payment system. The RBI has on several circumstances flagged concerns of various money laundering, terror financing, tax evasion, etc. with various private cryptocurrencies like Bitcoin, Ether, etc. With its own Digital Rupee, RBI plans to manage the above serious issues in an advantageous way.
No clarification on its congenital value
Another question is arising is, what would be the value of the Digital Rupee or CBDC? As of now, when this article is being written, there is no clarification regarding the price of CBDC by RBI or the Ministry of Finance.
Several models are proposed by various technology experts on how it could work. Some of the experts believe they are not going to be commodities or claims on commodities as they have no intrinsic value. Some of their claims that they are akin to gold clearly seem opportunistic. We will have to wait for some time, to get better clarity for it.
The announcements on the taxation system and the introduction of crypto, express the central government’s intention on cryptocurrencies and other virtual or digital currencies. Investors always keep in mind the risk and reward of investing in digital assets and have to act accordingly.