Despite Uncertainty Over Cryptocurrency, Is The New Taxation Announcement A Welcome Move?

Minister of Finance and Corporate Affairs Nirmala Sitharaman presented the Union Budget 2022-23 on January 1. In the parliament, she proposed introducing 'Digital Rupee' using blockchain and other technologies to be issued by the Reserve Bank of India (RBI), starting 2022-23. She said introducing a Central Bank Digital Currency would significantly boost the digital economy, and digital currency will also lead to a more efficient and cheaper currency management system.

Following FM's proposal, a debate is induced on digital currency as the government is yet to provide a framework for implementing it. The RBI had earlier raised severe concerns around private cryptocurrencies suspecting these may cause financial instability.

Uncertainty Over Crypto

Digital currency is an entirely new thing for India and its citizens, so security, custody of keys, and access needs to be addressed.

As the government is planning to transition into a digital economy, a campaign must be launched on raising awareness and education on the importance of cybersecurity, privacy, and data security among businesses and consumers. There should be technical refinements in digital payments for sustainable development.

Madhusudan E, a Fintech Association for Consumer Empowerment (FACE) member, stressed that digital currency's implementation process needs immediate attention, reported NDTV.

Also, some experts point out that the government does not recognise any other digital currencies in the country, even though it is finally launching its digital currency as an alternative to cryptocurrencies.

Digital Rupee, A Welcome Move

The introduction of the digital rupee has been welcomed as a path to legitimising the crypto sector and is expected to pave the way for crypto adoption and further innovation in India.

The launch of digital currency by RBI would acquaint Indian consumers with the advantages and efficiency of virtual currency and build an appetite for crypto and blockchain.

Avinash Kumar, CEO of ZebPay, a cryptocurrency exchange, told NDTV that the government's move can potentially make India a leader in this blockchain-enabled revolution.

Along with cryptocurrency exchanges, the announcement of ventures into the digital currency space by the government has been welcomed by fintech companies. There are expectations that digital Rupee has chances to bring applications for payment mechanisms.

Also Read: Government Proposed 30% Tax And TDS On Cryptocurrency Gains