During a government event in Doha, Qatar, India’s Union Minister of Commerce and Industry Piyush Goyal announced plans to intensify development of the country’s central bank digital currency (CBDC), known as the digital rupee (e?).
This move underscores the government’s preference for state-controlled digital finance over private cryptocurrencies, which face ongoing regulatory hurdles like steep taxes to curb adoption. Goyal emphasized that the CBDC would streamline transactions, cut down on paper usage, and provide faster, traceable payments—benefits he contrasted with the risks posed by unregulated crypto assets.
The Reserve Bank of India (RBI) has been piloting the digital rupee since November 2022, starting with wholesale versions for interbank settlements and gradually expanding to retail use. Recent pilots involve over 5 million users across 16 major banks, including innovations like deposit tokenization for traceable banking operations.
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Goyal highlighted features like “programmability” to direct funds precisely for welfare benefits and potential offline capabilities to boost financial inclusion in rural areas. India hasn’t outright banned private cryptocurrencies, but it discourages them through a 30% flat tax on gains and a 1% transaction levy (TDS).
Goyal reiterated concerns that legitimizing crypto via regulation could invite money laundering and financial instability, favoring the CBDC as a “safer alternative” with built-in traceability and central oversight. A September 2025 government document, cited by Reuters, signaled reluctance for comprehensive crypto laws, viewing them as implicit endorsement.
Despite the cautious policy, India ranks #1 globally in crypto adoption for the second year running, per Chainalysis‘ September 2025 report. The country leads in retail, institutional, and DeFi activity, driven by a young, tech-savvy population—yet this grassroots enthusiasm clashes with official rhetoric.
The Financial Intelligence Unit (FIU) recently issued notices to 25 offshore exchanges for non-compliance under anti-money laundering laws, signaling tighter enforcement. This “inflection point,” as described in recent analyses, could lead to calibrated liberalization—allowing regulated private crypto alongside CBDC dominance—or further crackdowns.
Earlier in 2025, reports of potential full bans surfaced, but global trends (e.g., G20 discussions) have prompted reviews of India’s 2024 crypto discussion paper. For now, the RBI’s focus remains on a “graded implementation” of CBDC to align with monetary stability goals.
The announcement has sparked discussions on X, with outlets like The Block amplifying the report and users debating its implications for India’s digital economy. As cross-border pilots via Project Nexus advance, the digital rupee could reshape remittances and trade, potentially positioning India as a CBDC leader while sidelining private alternatives.
Cryptocurrencies classified as Virtual Digital Assets or VDAs are legal to hold, trade, and invest in but not recognized as legal tender. Key regulations include a 30% flat tax on gains under Section 115BBH, 1% TDS on transfers under Section 194S, mandatory FIU-IND registration for exchanges, KYC/AML compliance under PMLA, and multi-agency oversight by RBI, SEBI, and the Ministry of Finance.
Emerging frameworks like the COINS Act 2025 emphasize user rights, self-custody, and a potential dedicated Crypto Assets Regulatory Authority (CARA). India’s crypto market has 107+ million users; adoption grew 20% YoY despite 30% tax. Global influences include FATF AML standards and OECD CARF.
Gifting VDAs is tax-free for the giver but taxable for the recipient as “Income from Other Sources” at slab rates if the value exceeds ?50,000 annually (Section 56(2)(x)).
All VDA gains must be reported in Schedule VDA of the Income Tax Return (ITR) form, mandatory from FY 2022-23 extended clarity in FY 2025-26.