India to actively promote CBDC…maintains high tax rates on virtual assets

India's government said it will further accelerate the introduction of a central bank digital currency (CBDC). At the same time, it reaffirmed an unfriendly stance toward private virtual assets (cryptocurrencies) and said it will maintain a high-taxation policy.

On the 7th (local time), The Block reported that Piyush Goyal, India's Minister of Commerce and Industry, said at a government event, "The central bank digital currency (CBDC) issued by the Reserve Bank of India will increase transaction efficiency," and added, "It will reduce the use of paper and enable payments that are faster and more transparent than the traditional banking system."

He went on, "CBDC will simplify transactions and increase speed while ensuring traceability," saying the spread of the Digital Rupee will enhance transparency across the financial system. The RBI has been conducting pilot operations of the Digital Rupee since the end of 2022.

However, he said the high-tax policy will be maintained. He said, "While the government has not banned virtual assets outright, virtual assets without central government backing are subject to high tax rates," adding, "This is a measure to curb speculative use."

According to Reuters, the Indian government is unlikely to recognize cryptocurrencies as institutional assets and plans to control the market through taxation and regulation rather than separate comprehensive legislation. A government official explained, "Including cryptocurrencies as a regulated category would effectively grant them legitimacy."

Meanwhile, according to a September report by blockchain analysis firm Chainalysis, India ranked first worldwide in virtual asset adoption for the second consecutive year. The report assessed that India leads other countries in retail investment, institutional trading, and decentralized finance (DeFi).