Days after a central bank report suggested India isn’t in a rush to create crypto regulations, a spokesperson for the ruling party has publicly backed a government bond-backed digital token. Pradeep Bhandari, the national spokesperson of the Bharatiya Janata Party (BJP) recently wrote an opinion piece for a publication where he elaborated on reasons that back the proposal.
A digital Rupee token could carve in a new era for daily utility payments, Bhandari said. He noted that pegging the token’s value to government bonds would remove volatility and eliminate speculative elements making the token an extension of the Indian fiat currency.
“With its scale, talent, and financial depth, India has the capacity to lead in this space. A natural next step could be to consider a regulated, rupee-backed digital asset,” Bhandari wrote for MoneyControl.
The Trump Card
Back in July, the U.S. historically passed its stablecoin-focussed “GENIUS Act”. This regulation is intended to oversee the creation, issuance, and distribution of stablecoins, backed against the U.S. dollar.
When the regulation was being analyzed by the congress there, several U.S. officials as well as President Trump had highlighted that dollar-pegged stablecoins could maintain the international value of the USD amid the ongoing tariff tensions and calls to opt for de-dollarization among the BRICS nation.
Bhandari, in his opinion, essentially seconded the U.S.’ outlook and said, “a digital Rupee could enable faster, cheaper, and more secure cross-border transactions – positioning the rupee as a trusted medium of exchange in trade, remittances, and fintech.”
Predicted Impact
Digital tokens like cryptocurrencies and stablecoins are known for facilitating immediate cross-border transactions, while leaving permanent and unchangeable logs on the corresponding blockchains.
Bhandari has predicted that the large transfer of remittances that India ropes in annually can overcome prevailing issues like delays and transaction costs.
In addition, owing to the link with govern bonds, a related token could create a demand for sovereign debt, Bhandari highlighted.
Overall, the BJP spokesperson highlighted that a demand spike in government bonds could allow interest rate cuts around lower yields — that would encourage the RBI to bring about policy changes.
Overall, Bhandari said, that a phased experimental approach in exploring the suggestion could be a “prudent way forward”.
India’s stance on virtual digital assets (VDAs)
For the last three years, India has been working on developing and conducting the trials of its eRupee CBDC. Multiple national banks are being part of these trials.
Mainstream cryptocurrencies, meanwhile, continue to be scrutinized in the country that are seemingly logging a gradual growth owing to comprehensive crypto regulations.
While the RBI has reflected a regulatory uncertain sentiment in its recent report, the finance ministry has stayed mum on the topic for a while.