India’s Crypto Regulatory Stance Continues to Fuel Debate, With CBDCs Seen Having an Edge Over “Private Cryptocurrencies”

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.”

India's stance on cryptocurrencies and central bank digital currencies (CBDCs) continues to be a subject of discussion, with recent statements suggesting that CBDCs may have an advantage over “private cryptocurrencies.” In an Oct. 23 X post, CoinDCX Co-founder and CEO Sumit Gupta shared his thoughts on the matter.

According to Gupta, CBDCs and cryptocurrencies like Bitcoin ( BTC) serve different purposes and “shouldn’t be viewed as competitors.” While cryptocurrencies aim to facilitate peer-to-peer transactions and financial inclusion, CBDCs are designed to complement existing fiat currencies and banking systems.

In an interview with Cointelegraph, Gupta stated that CBDCs, being centralized digital currencies, play a crucial role in monetary policy and governance. He explained further, saying:

Gupta added that “this centralization enables effective implementation of monetary policy, allowing for better management of inflation, liquidity and interest rates.”

However, some members of the crypto community remain skeptical of CBDCs. In a recent interview with Cointelegraph, TON Society Co-Founder Jack Booth shared his concerns, saying, “CBDCs pose the greatest danger to self-sovereignty,” adding that public trust in governments is at historic lows.

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.

CBDCs vs. cryptocurrencies: A closer look

In an interview with Cointelegraph, Gupta shared his perspective on the differences between CBDCs and cryptocurrencies, highlighting their distinct characteristics and purposes.

According to Gupta, both CBDCs and cryptocurrencies have their own strengths and weaknesses, and they cater to different needs within the broader financial ecosystem. He explained further, saying:

Gupta added that cryptocurrencies, on the other hand, “are valuable for their decentralization, which enables faster, cheaper and more inclusive transactions.” He went on to say that crypto “aims to complement the existing financial infrastructure and empower individuals with greater financial freedom.”

Despite the Indian government's consideration of banning private cryptocurrencies, Gupta believes that the country is open to fintech innovation. He pointed out that crypto exchanges have been able to comply with tax frameworks and the Financial Intelligence Unit's (FIU) guidelines, thanks to India's crypto regulation.

This shift was evident in March, when the Supreme Court of India overturned the Reserve Bank of India's (RBI) ban on banks dealing with crypto-related firms.

Striking the regulatory balance: Gupta's suggestions

In his X post, Gupta also urged the Indian government to “ensure a level playing field where all participants follow the law of the land.” He highlighted the need for clear crypto regulations and the importance of striking a balance between encouraging innovation and protecting citizens.

Gupta also expressed hope that “relief is given on taxation” following the establishment of monitoring and compliance measures, which he says are being “driven through PMLA [Prevention of Money Laundering Act] initiatives.”