The Indian government has directed the country's central bank to begin developing a central bank digital currency (CBDC) while imposing new taxes on crypto assets.
Finance minister Nirmala Sitharaman unveiled a set of new taxes on crypto asset transactions in her budget speech yesterday, announcing that the government will take 30% of "any income from the transfer of any virtual, digital asset", as well as a "tax deducted at source" of 1%.
Sitharaman also proposed a "digital rupee" should be issued by India's central bank, "using blockchain and other technologies".
"Introduction of a central bank digital currency will give a big boost to the digital economy," Sitharaman said in a speech to parliament. "Digital currency will also lead to a more efficient and cheaper currency management system."
Sitharaman said the CBDC was "to be issued by the Reserve Bank of India starting 2022 and 2023".
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Many crypto investors have viewed the move favourably, as it seems the government has abandoned a potential plan to ban crypto assets.
The country's central bank previously attempted a complete ban on crypto transactions but was overruled by the Supreme Court in March 2020.
In a television interview with Indian outlet DD National after the announcement, Sitharaman denied the government had reached a final decision on the regulation of crypto assets.
A consultation on crypto assets is currently ongoing, meaning "we don't know yet how we are going to regulate them," she said.
