The Reserve Bank of India (RBI) now states that it is on exploration for finding factors significant for digital version of fiat currency. RBI’s exploration is further hailed by the cryptocurrency stakeholders as a step for strengthening the fintech ecosystem in India. (RBI remkared in a booklet title ‘Payment and Settlement Systems in India’ released this week).

The booklet states, “Private digital currencies (PDCs) / virtual currencies (VCs) / cryptocurrencies (CCs) have gained popularity in recent years. In India, the regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks."

It adds, “Nevertheless, the RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalise it.”

It is a welcome move by RBI.

The CEO and Cofounder of CoinDCX (a cryptocurrency exchange), Sumit Gupta, to a renowned media house said, “The fact that the RBI is mulling over introducing a central bank digital currency (CBDC) in the country is a step in the right direction."

Sumit added, “Such moves will help India be on par with the emerging markets and be a key player in the fintech ecosystem. As we are witnessing an increase in the adoption of cryptocurrencies globally, many countries are considering issuing their own version of digital currency."

The partial softening in RBI’s stand on the cryptocurrency came after the Indian Supreme Court, in 2020, set aside the circular issued by the RBI which prohibited any official from delivering banking services to any virtual or cryptocurrency dealings.

The RBI payment booklet noted that the central banks on and around the world are examining the leverage factors on technology and issue fiat money in digital form.

The cryptocurrencies values last year went past $1 trillion mark and Bitcoin crossed the $40,000 mark before reaching $30,846.79 on Wednesday.

The stakeholders of Cryptocurrencies expect some clarifications in the Union Budget 2021.

The Founder and CEO of Bitex, Monark Modi, said, “Just like any other financial markets that have matured in India owing to regulations, cryptocurrency investors have similar expectations from the government from this budget that will help this new financial market move towards certainty."

Monark added, “India has seen phenomenal growth in cryptocurrency trading volumes as well as the size of the community participating in this alternate investment class. But due to lack of clarity and in the absence of regulations, banks are still hesitant in providing services to the exchanges and have been blocking transactions related to cryptocurrencies, which is impacting the investors."