Centralization Under the Guise of a CBDC

As Bitcoin surges past $126,000, India is quietly signaling that the path to digital finance should run through government control.

Commerce Minister Piyush Goyal has warned citizens that cryptocurrencies like Bitcoin carry no guaranteed value, framing them as speculative assets that expose users to risk while implicitly promoting central bank-backed digital currency as the safe, preferred alternative.

During a recent roundtable in Qatar, Goyal stressed that while trading unbacked crypto is not illegal, it is fully taxable and undertaken at one’s own risk.

“Suppose tomorrow there’s no buyer, there’s nobody to guarantee. It’s a thing you can do at your own risk and cost. The government doesn't encourage or discourage. We only tax it.”

The Indian government similarly views any digital assets that operate outside regulatory control as a dangerous gamble that can leave citizens exposed to financial losses.

By contrasting speculative cryptocurrencies with the forthcoming RBI-backed digital currency, the government is clearly shaping public perception toward sovereign digital assets.

RBI Rolls Out Blockchain-Backed Digital Currency

The RBI-backed initiative is framed as faster, more transparent, and more efficient than traditional banking, leveraging blockchain technology not for decentralization but to reduce paper usage, streamline interbank settlements, and combat illicit activity within a system fully monitored by the central bank.

In parallel, the RBI is piloting deposit tokenization using its wholesale CBDC infrastructure, partnering with domestic banks to modernize transaction flows while keeping oversight firmly centralized.

Unlike stablecoins or conventional CBDCs, India’s new digital currency is explicitly sovereign-backed and asset-supported, presenting a regulated alternative to the unbacked and unpredictable nature of Bitcoin.

India’s approach reveals a subtle but significant push toward centralization. By actively discouraging citizens from engaging with decentralized cryptocurrencies while encouraging the adoption of a government-controlled digital rupee, India is not merely protecting investors from volatility; it is asserting control over the nation’s digital financial ecosystem.

The regulatory stance signals a clear priority: citizens’ engagement with digital finance should be channeled through government-sanctioned avenues, leaving speculative and decentralized assets on the margins.

The Trade-Off Between Stability and Decentralization

This strategy raises broader questions about the balance between financial stability and decentralization. Bitcoin was designed to operate independently of governments, offering transparency and autonomy, yet India is steering citizens toward digital assets that are fully monitored, traceable, and under central bank authority.

While this approach promises faster settlements, enhanced oversight, and reduced risk for users, it also represents a consolidation of financial power in the hands of the state, potentially at the expense of the core principles that underpin decentralized cryptocurrencies.

India’s dual approach therefore can be seen as a calculated move to centralize control over the nation’s digital monetary system. The government is using the allure of efficiency, transparency, and safety to encourage adoption of its sovereign-backed solution while subtly marginalizing decentralized alternatives.

While this may be prudent from a regulatory and risk perspective, it conflicts with the foundational ethos of Bitcoin, which was designed to bypass centralized control and empower individuals.

Whether India’s approach represents smart governance or an overreach that undermines digital freedom remains a critical question for both domestic users and the global crypto community.