A former hedge fund manager, Rishi Sunak is a big crypto bull. He wants the UK to become the crypto hub of the world. He is of Indian origin and most Indians are happy at Sunak becoming the Prime Minister of a country that ruled India for over 200 years. One of the key messages that Sunak brings to the table is his support for cryptocurrencies. Is India listening to Sunak? Will it at all?
As the Chancellor of Exchequer, in April last year, Sunak asked the Bank of England and Her Majesty’s Treasury to explore the possibility of launching a central bank digital coin (CBDC) and working towards it. His support for cryptocurrencies was once again on display in April this year when he articulated his policies to make England a hub of cryptocurrencies. What Sunak meant was integrating stablecoins into a form of payment. Subsequently, the Royal Mint was assigned the responsibility to develop non-fungible tokens (NFT) as a mark of the government’s forward-looking approach. These antecedents make his choice for the next Chancellor of the Exchequer an interesting exercise to watch out for.
Rishi Sunak’s wife Akshata Murthy who he met at Stanford University is the daughter of Infosys founder NR Narayana Murthy. She has roughly a billion-dollar net worth. Sunak’s parents of Indian descent migrated to Britain from East Africa in the 1960s.
While average Indians feel proud to see a person of Indian origin becoming the UK’s prime minister, Sunak’s ascent to the top position comes in the wake of an unprecedented economic crisis in the country amid a global recession. UK’s position as the fifth largest economy of the world was recently wrested by India, which is being seen as the brightest spot in an otherwise gloomy economic environment worldwide. Can Sunak deliver on the expectations is anybody’s guess but his approach is going to be a little different and unorthodox. That’s for sure! His unflinching support for digital assets and his plans to integrate them into Britain’s financial system makes him one of the few world leaders who support cryptocurrencies.
Meanwhile, in India, the Reserve Bank of India (RBI) recently released a concept note on the planned launch of CBDC or digital rupee this year. A pilot project with specific use cases will be launched, it said, without giving a timeline. Indian Finance Minister Nirmala Sitharaman in the annual budget for 2022-23 announced the introduction of Indian CBDC during the current financial year. On some occasions, she hinted that the digital rupee could be launched sometime this year itself.
“The purpose behind the issue of this Concept Note is to create awareness about CBDCs in general and the planned features of the Digital Rupee (e₹), in particular. It explains the objectives, choices, benefits, and risks of issuing a CBDC in India. The Note also seeks to explain the Reserve Bank’s approach towards the introduction of the CBDC,” a release from the RBI said.
In its annual report for 2021-22, RBI said that it would launch CBDC in a graded manner and will ensure that it doesn’t disrupt the existing payments and settlement system. The central bank also said that the digital rupee will follow the country’s economic and monetary policy.
“The Concept Note also discusses key considerations such as technology and design choices, possible uses of the Digital Rupee, issuance mechanisms, etc. It examines the implications of the introduction of CBDC on the banking system, monetary policy, financial stability, and analyses privacy issues,” the concept note released on Friday said.
Inspired by the belief that the introduction of CBDC will bring efficiency in some areas of banking by removing the need to deal with cash and ways to store and manage it, the Indian establishment was quite bullish on its CBDC project. But the central bank’s approach to the digital rupee has been cautious as it planned a graded adoption of the digital coin. At the moment, the RBI is only planning to launch a pilot project for certain use cases.
“The Reserve Bank will soon commence pilot launches of e₹ for specific use cases. As the extent and scope of such pilot launches expand, RBI will continue to communicate about the specific features and benefits of e₹, from time to time,” the concept note said.
Earlier, the Indian government had planned to bring a cryptocurrency bill that would provide the legal framework to ban cryptocurrencies and launch official digital coins or CBDC. But while presenting the annual budget this year, the Indian government dealt with the two issues separately. While it announced to launch of CBDC by making amendments to the RBI Act, it did not make its stand clear on the legality of cryptocurrencies. Rather, it introduced a hefty 30% capital gains tax and a 1% transaction fee on all crypto transactions.
Will Sunak’s policies expedite the crypto adoption worldwide, especially in India where people will watch out for his actions and policies with awe and admiration. (IPA Service)
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