Does India Have Room For Both Bitcoin and CBDC? - CoinDCX Co-founder

India has recently announced that the country is considering banning cryptocurrencies like Bitcoin and Ether in favor of its Central Bank Digital Currency (CBDC).

Indian local media reports that after consulting with key institutions and regulators regarding the private cryptocurrencies, the Indian government came to the conclusion that CBDC outperforms cryptocurrencies in every way because it has every advantage of cryptocurrency without possessing the inflationary and security risk that comes with crypto.

CBDC and Cryptocurrencies should coexist, not compete

But Co-founder and CEO of CoinDCX, Sumit Gupta disagrees that CBDC can possess all the strengths of cryptocurrency because each one of them serves distinct functions and offers different values to the table. Hence these two entities should never be seen as competitors.

In an interview with Cointelegraph, Gupta explained how important it was to have a centralized currency controlled by the nation's central bank. This would ensure the stability of the currency as the supply and usage is properly controlled by the nation's central bank.

Gupta adds that this centralisation would then lead to the effective implementation of monetary policy, allowing for better management of inflation, liquidity and interest rates.

But there are others who pose a contradictory opinion. Jack Booth, co-founder of TON Society, told Cointelegraph, “CBDCs pose a serious threat to financial self-sovereignty.” He notes that with the declining trust in the government, switching to CBDC would be akin to allowing unelected officials to gain control over their personal funds.

Banning Cryptocurrencies could destroy India's innovations

While India has debated banning private cryptocurrencies, Gupta believes the country values 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 would stifle the entrepreneurial spirit and hinder advancements in blockchain technology."

India’s regulatory framework has allowed crypto exchanges to comply with Financial Intelligence Unit (FIU) guidelines and tax obligations. A turning point occurred in March when India’s Supreme Court overturned the Reserve Bank of India’s (RBI) ban on banks working with crypto-related firms.

Finding a Regulatory Balance

Gupta encourages the Indian government to “establish a level playing field where all participants comply with local laws.”

"Unfortunately, there are still players which are not compliant on various parameters, taxation still remains high on our agenda. Time and time again, various reports have established that taxation drove a lot of users to offshore platforms."

Gupta also expressed hope for tax relief, noting that recent compliance efforts under the Prevention of Money Laundering Act (PMLA) have strengthened regulatory oversight.