New Push for the Digital Rupee
India is gearing up for the next major step in its digital finance revolution, as Commerce Minister Piyush Goyal announced a new Reserve Bank of India (RBI)-backed digital currency project during his visit to Qatar. Speaking at a roundtable, Goyal emphasized that the initiative would make transactions faster, cheaper, and more transparent, aligning with the country’s vision of a fully digital economy.
According to The Hindu, the upcoming project builds on the digital rupee pilot launched by the RBI in late 2022. In parallel, RBI Chief General Manager Suvendu Pati revealed plans to start a deposit tokenization pilot this week — a move that could reshape how banks handle payments and settlements in India.
Not a Stablecoin - Not a Traditional CBDC Either
While some initially speculated the project might resemble a stablecoin, Goyal clarified that this isn’t the case. Instead, India’s RBI-backed digital currency will be a blockchain-powered payment instrument — distinct from crypto assets but designed to bring similar speed and programmability benefits.
The Reserve Bank of India will reportedly use its wholesale central bank digital currency (CBDC) as the base layer for the deposit tokenization pilot, working with major domestic banks to test real-world applications. The initiative is part of a broader push to modernize India’s payment infrastructure while maintaining full regulatory oversight.
India’s “Tax-Only” Approach to Crypto
Despite the government’s innovation push, Goyal reiterated India’s hardline stance on cryptocurrencies like Bitcoin and Ethereum, which he said “have no backing or guaranteed value.”
India currently imposes a 30% tax on crypto profits and a 1% TDS on transactions, measures that have driven many local traders to offshore exchanges. Despite this, crypto adoption among Indian retail investors remains high, with millions of citizens holding digital assets even under tight restrictions.
Balancing Innovation and Control
The government’s stance underscores a balancing act — embracing blockchain technology for state-backed initiatives while restricting decentralized, privately issued tokens. The digital rupee, launched in 2022 for wholesale transactions, already operates in limited capacity among major Indian banks.
The new RBI-backed system aims to expand that model, creating digitized settlement layers that can work alongside existing banking infrastructure. This could potentially make India a leader in CBDC interoperability, rivaling efforts in China and the European Union.
A Tightrope Between Progress and Caution
As Bitcoin surged past $126,000 this week, India’s contrasting position stands out globally. The government’s digital rupee ambitions are expanding — but so too is its reluctance toward unregulated crypto assets.
With CBDC trials, tokenized deposits, and strict taxation, India is signaling that its financial modernization will happen on sovereign rails, not decentralized ones. The message is clear: crypto may stay — but only on the government’s terms.
