India to regulate crypto via taxes, expand RBI-backed digital currency

India is doubling down on its controlled approach to digital assets by tightening oversight and expanding the reach of its central bank digital currency (CBDC). During the India-Qatar Joint Commission on Economic and Commercial Cooperation, Commerce Minister Piyush Goyal said the government will continue regulating cryptocurrencies through taxation while broadening access to the Reserve Bank of India’s (RBI) digital ￰0￱ statement reflects India’s preference for traceable, government-backed digital payments over unregulated crypto ￰1￱ India @CryptooIndia · Follow 🚨 BREAKING: 🇮🇳 India Govt does not encourage cryptocurrencies without sovereign or asset ￰2￱ will introduce an RBI-backed digital currency, similar to US stablecoins, to replace normal currency.– Commerce Minister Piyush Goyal Watch on Twitter View replies 10:39 AM · Oct 7, 2025 771 Reply Copy link Read 154 replies RBI’s digital rupee moves towards wider adoption Goyal clarified that India does not support unbacked cryptocurrencies due to their high risk and speculative nature.

Instead, it aims to strengthen the RBI-backed digital rupee — launched in pilot form in 2022 — to make it more accessible and widely used across the ￰3￱ RBI’s digital currency currently exists in two versions: a wholesale model for interbank settlements and a retail model for consumers and ￰4￱ over five million users by early 2025, the government now plans to extend its use by enabling non-bank payment platforms to distribute e-rupee ￰5￱ expansion will make transactions faster and more transparent while reducing reliance on physical ￰6￱ digital rupee, functioning similarly to stablecoins but backed by sovereign reserves, provides traceability that can help curb financial fraud, hacking, and other cyber ￰7￱ also aligns with India’s broader sustainability goals by reducing paper consumption linked to cash ￰8￱ keeps its strict tax regime on crypto assets While promoting a secure, state-backed alternative, India continues to impose one of the world’s toughest crypto tax ￰9￱ from digital assets face a flat 30% tax, and transactions above ₹10,000 attract a 1% tax deducted at source (TDS).

The structure emphasises oversight and compliance rather than innovation or incentives. A Mudrex survey of 9,352 participants found that 93% of Indians support regulation for investor protection, yet only 13% approve of heavy ￰10￱ 66% of respondents, the high tax rates were cited as the biggest deterrent to investing in cryptocurrencies, seen as restrictive and discouraging ￰11￱ the tax burden, India continues to rank first in the Global Adoption Index 2025, driven by retail enthusiasm, fintech integration, and strong developer ￰12￱ like Bharat Web3 Association are helping standardise compliance, while the integration of blockchain payments with systems like UPI has made crypto-related transactions more ￰13￱ pilot to platform: India’s digital shift gathers pace India’s digital rupee has already achieved notable milestones since its pilot ￰14￱ March 2025, circulation reached ₹1,016 crore, and the RBI announced plans to enable cross-border CBDC ￰15￱ firm Cred recently became the first non-bank company to join the project, distributing e-rupee wallets through YES ￰16￱ developments indicate the government’s gradual but consistent movement towards a more digitised financial ￰17￱ focus remains on maintaining state oversight while leveraging blockchain ￰18￱ RBI’s next phase will likely involve expanding the CBDC beyond banks and allowing broader participation from payment companies and fintech startups.

India’s strategy blends innovation with regulation Goyal’s remarks underline India’s two-track strategy: advancing a sovereign digital currency while ensuring tight regulation of private ￰19￱ prioritising traceability, security, and fiscal control, India aims to capture the benefits of digital finance without compromising monetary ￰20￱ country’s digital policy places financial transparency and national security at the centre of its crypto ￰21￱ the digital rupee evolves and usage expands, India could emerge as one of the few major economies to balance innovation with regulatory discipline — building a bridge between blockchain technology and state-backed finance.