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India is preparing to roll out an RBI-backed digital currency that will offer citizens faster, safer, and fully traceable transactions which is a landmark shift in the country’s financial and regulatory framework.
Union Minister Piyush Goyal announced the development during a financial cooperation meeting between India and Qatar in Doha. The minister emphasized that while the government discourages unregulated cryptocurrencies, it remains committed to digital innovation grounded in sovereign guarantees.
We don’t encourage [unbacked crypto] because we don’t want anybody to be stuck at some point with a cryptocurrency that has no backing and nobody at the backend, Piyush Goyal, Minister of Commerce and Industry, Government of India, as reported by The Hindu Business Line.
The proposed RBI-backed digital currency is expected to be built on a blockchain infrastructure and fully guaranteed by the Reserve Bank of India (RBI), giving it legitimacy similar to fiat money. According to officials, the project aims to address issues of transparency, transaction speed, and monetary stability, while avoiding the volatility associated with unregulated crypto assets.
Goyal clarified that India’s approach toward cryptocurrency remains conservative. Instead of imposing outright bans, the government has implemented heavy taxation on unbacked digital assets to discourage speculative and illegal trading.
As far as cryptocurrency, which is not backed by the Central Government, while there is no ban as such, we are taxing it very heavily, Piyush Goyal, during his address in Doha.
Local media outlets including The Economic Times report that India’s crypto tax regime which is a 30% capital gains tax and a 1% transaction levy has pushed more than 90% of crypto trading offshore, according to data from the Esya Centre.
Despite leading the world in adoption rankings, India’s stringent tax policies have restricted the domestic crypto market. Industry experts suggest that the upcoming RBI-backed digital currency could offer a regulated alternative that restores confidence among users and investors.
Taxation was always meant to discourage speculation, not innovation, said Amit Khare, policy researcher at the Esya Centre. An RBI-backed digital currency could bridge that gap by offering a trusted on-chain payment system.
Goyal noted that the RBI-backed digital currency will function much like stablecoins, maintaining a fixed value by being pegged directly to the Indian Rupee and backed by central bank reserves.
This initiative aligns with global trends toward sovereign-backed digital assets, such as the U.S. GENIUS Act, which sets regulatory standards for stablecoins. India’s move suggests a strategic effort to keep pace with technological advancements while maintaining financial sovereignty.
Finance Minister Nirmala Sitharaman echoed similar sentiments during an economic conclave in New Delhi last week, calling on nations to proactively engage with the evolving world of digital currencies.
No nation can insulate itself from systematic change. Whether we welcome these shifts or not, we must prepare to engage with them, Nirmala Sitharaman, Finance Minister of India, in a statement covered by Reuters.
Sitharaman’s remarks highlight India’s recognition of digital currencies as an inevitable evolution in global finance which is one that the RBI-backed digital currency aims to navigate responsibly.
According to a government document cited by Reuters, India does not plan to fully regulate cryptocurrencies in the short term. Instead, the focus will be on partial oversight, allowing the ecosystem to evolve under controlled conditions.
The Reserve Bank of India warned that integrating cryptocurrencies into the mainstream financial system could expose the economy to systemic risks. The document noted that granting full legitimacy to private digital assets might encourage speculative bubbles and cross-border financial instability.
By contrast, an RBI-backed digital currency often referred to as the Digital Rupee allows the government to harness blockchain’s benefits while retaining monetary control. Analysts believe it will strengthen India’s efforts to modernize its payment infrastructure and reduce dependency on cash.
The Digital Rupee is a bridge between tradition and technology, said Dr. Neha Singh, fintech policy analyst at India Blockchain Forum. It provides the transparency of blockchain with the stability of sovereign backing.
As India accelerates its push toward a cash-lite and transparent economy, the RBI-backed digital currency could become a cornerstone of the country’s financial modernization. The initiative supports the government’s broader digital inclusion goals and may enhance India’s position in global fintech innovation.
Industry observers say the Digital Rupee’s rollout will also serve as a test case for other emerging economies exploring central bank digital currencies (CBDCs). With policymakers balancing innovation against risk, India’s strategy could set a model for how developing nations adopt blockchain responsibly.
For a country that has long taken a cautious stance toward crypto, this move marks a pivotal transition as one that could reshape not only how Indians transact but how they perceive value in the digital age.
