India Is Preparing A Total Ban On Bitcoin

In a significant stance, the main regulators and institutions in India consulted by the government advocate for the prohibition of private cryptocurrencies like Bitcoin and Ether, favoring the central bank digital currency (CBDC).

India strengthens its position against Bitcoin

In July 2024, several Indian government experts expressed support for a possible prohibition of private cryptos like Bitcoin and Ether during preparatory consultations. According to a senior official who wished to remain anonymous, “CBDCs can do everything cryptocurrencies do, with more advantages and less risk.” 

The Indian position aligns with the recommendations of the G20, of which India is a member. Indeed, the country adopted in September 2023 the synthesis document of the IMF and the Financial Stability Board (FSB), which allows member countries to impose strict restrictions on crypto, including a possible total ban.

Indian authorities highlight nevertheless their interest in blockchain technology, which they wish to leverage for socially beneficial uses such as the tokenization of government securities and targeted grant allocation.

The digital rupee as a credible alternative?

The growing success of the pilot project of the digital rupee (e₹) strengthens the government’s position. Launched in November 2022 for the wholesale segment and then extended to the retail segment in December, the Indian CBDC now has over 5 million users and 16 participating banks.

The State Bank of India (SBI) has already demonstrated the practical potential of CBDCs through an innovative pilot project in Odisha and Andhra Pradesh. This program allows tenant farmers to access loans specifically programmed for the purchase of agricultural inputs.

The governor of the RBI, Shaktikanta Das, recently emphasized in Bengaluru that CBDCs could catalyze financial inclusion.

While the Indian government maintains a hostile stance towards Bitcoin, citizens are following a radically opposite trajectory. Crypto adoption is experiencing explosive growth: according to the latest report from Chainalysis, India tops the global ranking of crypto adoption among 151 assessed countries for the second consecutive year.

In summary, governmental attempts to impose CBDCs in place of Bitcoin seem doomed to fail. Paradoxically, each new restrictive measure against cryptos is accompanied by an acceleration of their adoption by the population.