The Indian government has recently voiced its skepticism towards cryptocurrencies, including Bitcoin, while preparing to unveil a new digital currency initiative backed by the Reserve Bank of India (RBI).

During a meeting in Qatar, India’s Commerce Minister Piyush Goyal announced the imminent launch of an RBI-backed digital currency, as reported by the news outlet The Hindu.

In another related move, the RBI is set to initiate a pilot program for deposit tokenization in the coming days, according to Suvendu Pati, the chief general manager in the fintech department at the RBI. This pilot will utilize the wholesale segment of India’s Central Bank Digital Currency (CBDC) as a foundational element, aiming to collaborate with several domestic banks.

Not a Stablecoin, Not a CBDC

Minister Goyal emphasized that the upcoming digital currency is designed to facilitate transactions more efficiently and transparently compared to traditional banking practices. He expressed his opposition to the concept of an RBI-backed stablecoin, stressing that the new framework would streamline transaction processes further.

“It will only make it easier to transact. It will also reduce paper consumption and will be faster to transact than the banking system,” stated Goyal, noting that blockchain technology would underpin this initiative to ensure transparency and mitigate illegal transactions.

Crypto Not Encouraged nor Discouraged: “We Only Tax It”

While unveiling the RBI’s digital currency project, Goyal reiterated India’s cautious stance toward cryptocurrencies like Bitcoin, labeling them as assets with “no back end guaranteeing any value.”

“We have not been encouraging cryptocurrency which does not have sovereign backing or which is not backed by assets,” he added. He stressed that although India has not banned cryptocurrency trading, the government refrains from endorsing or condemning it, stating: “Suppose tomorrow there’s no buyer, there’s nobody to guarantee. It’s a thing you can do at your own risk and cost. The government doesn’t encourage or discourage. We only tax it.”

These statements from Goyal follow a significant rise in Bitcoin’s market value, which recently peaked above $126,000 according to data from Coinbase.

The RBI has historically taken a cautious approach to cryptocurrencies, having previously discussed whether to implement a total ban on crypto transactions. Recent developments reflect the ongoing evolution in India’s regulatory landscape regarding digital assets.