Reserve Bank of India

India explores offline functionality of CBDCs — RBI executive director

March 4, 2023 Coin Telegraph

CBDC

In addition to offline functionality, RBI is gauging CBDC’s potential for cross-border transactions and linkage with legacy systems of other countries.

India’s recently launched in-house central bank digital currency (CBDC) — the digital rupee — is now being tested for offline functionality, revealed Ajay Kumar Choudhary, executive director of the Reserve Bank of India (RBI).

The RBI — India’s central bank and regulatory body — launched the wholesale segment pilot for the digital rupee on Nov. 1, 2022, onboarding 50,000 users and 5,000 merchants for real-world testing. As of Feb. 25, around $134 million and 800,000 transactions have been completed via wholesale CBDCs.

Building on this progress, Choudhary said the RBI is looking at the CBDC’s offline functionality. Speaking to CNBC TV18, he stated the RBI is gauging the CBDC’s potential for cross-border transactions and linkage with legacy systems in other countries. He added:

“We are eagerly looking forward to private sector and fintechs’ participation in CBDC. We will see their contribution, especially on offline and cross-border CBDC transactions.”

Moreover, speaking on behalf of the RBI, Choudhary said the CBDC would soon become the medium of exchange and needs all features of physical currency, including anonymity.

India’s motivation for launching the CBDC was to improve regional financial inclusion and spearhead the digital economy. Choudhary also told CNBC TV18 that CBDC would eventually act as a replacement for cryptocurrencies.

On Feb. 21, India’s national payment network, the unified payments interface (UPI), expanded its services to Singapore.

UPI goes Global!

Since UPI was introduced as a payment system in India, it has revolutionised the lives of Indians, but in fact, India’s digital payment system is steadily becoming globally attractive & is being adopted by other countries.#indiafirst #IndiaSingaporeRelations pic.twitter.com/55sGh5bzbZ
— MyGovIndia (@mygovindia) February 21, 2023

The UPI PayNow integration allows citizens from India and Singapore to send money across borders quickly.

Initially, four major Indian banks — the State Bank of India, Indian Overseas Bank, Indian Bank and ICICI Bank — will facilitate outgoing remittances. Axis Bank and DBS Bank India will facilitate incoming remittances. Singapore’s DBS Bank and Liquid Group will provide the service to users in the region.

India expands national payment network to Singapore: What’s in it for crypto?

February 21, 2023 Coin Telegraph

CBDC

One of the banking partners in the cross-border remittance service is also part of the government’s CBDC program.

India’s national payment network, the unified payments interface (UPI), is expanding its services beyond Indian borders, integrating with Singapore’s PayNow rapid payment system. Shaktikanta Das, governor of the Reserve Bank of India, and Ravi Menon, managing director of the Monetary Authority of Singapore, launched the facility through token transactions using the UPI-PayNow linkage.

The UPI-PayNow integration will allow users of the two nations to send money across borders quickly. It is possible to send or receive money from India using only a UPI-id, cellphone number or virtual payment address for money held in bank accounts or e-wallets. UPI’s instant real-time payment system helps to transfer cash immediately via a mobile interface between the two bank accounts.

UPI goes Global!

Since UPI was introduced as a payment system in India, it has revolutionised the lives of Indians, but in fact, India’s digital payment system is steadily becoming globally attractive & is being adopted by other countries.#indiafirst #IndiaSingaporeRelations pic.twitter.com/55sGh5bzbZ
— MyGovIndia (@mygovindia) February 21, 2023

Initially, the State Bank of India, Indian Overseas Bank, Indian Bank and ICICI Bank will facilitate outgoing remittances. Axis Bank and DBS Bank India will facilitate incoming remittances. DBS Bank and Liquid Group will provide the service to users in Singapore.

ICICI Bank, a private sector bank in India is also part of the country's central bank digital currency program. India launched its CBDC pilot in two phases, one in November for the wholesale market and another in December for retail users. Since the trial's beginning on December 1st, 2022, the digital rupee pilot project has logged 770,000 transactions involving eight banks. Five cities are already participating in the experiment, with nine more cities possibly joining the trial soon.

Sathvik Vishwanath, CEO of Indian crypto exchange Unocoin, told Cointelegraph:

"This is a great value addition for India’s payment rails given that there is close to 30% population in Singapore are ex-pats and they send money to India once a month or a quarter. This integration eliminates friction reducing the processing time and costs.”

India’s digital payment infrastructure has scaled dramatically over the past few years and was popularised with the advent of Covid-19. While the government is sceptical about the larger crypto market, imposing a 30% tax on crypto gains, which subsequently forced major players to move out of the country. However, the government is keen on using blockchain tech for its CBDC program and the existing infrastructure could help in scaling its digital CBDC pilot as well.

India in ‘no hurry’ for CBDC as digital rupee pilot onboards 50k users

February 8, 2023 Coin Telegraph

CBDC

The central bank of India wants to proceed with CBDC testing in the smoothest way possible, deputy governor Rabi Sankar said.

The Indian government doesn’t want to rush its central bank digital currency (CBDC) pilot despite joining the CBDC race just a few months ago.

India’s recently launched CBDC pilot has amassed 50,000 users, and 5,000 merchants since the Reserve Bank of India (RBI) launched the digital rupee pilot last year, local news agency The Economic Times reported on Feb. 8.

Announcing the first public milestones of India’s digital currency at a policy press conference, RBI deputy governor Rabi Sankar stressed that the government plans to proceed with CBDC testing in the smoothest way possible.

“We have our targets in terms of users, in terms of merchants. We will go slowly,” Sankar stated, noting that the RBI doesn’t want to push CBDC developments without having full awareness about its potential impact. He stated:

"We want the process to happen, but we want the process to happen gradually and slowly. We are in no hurry to make something happen so quickly.”

The latest announcement adds up to data from an official digital rupee application, which suggests that the pilot is taking no more users. According to data from the digital rupee app by the ICICI Bank, India’s CBDC program is full at the time of writing, suggesting that more users would be able to join the trial at a later date.

*India's e-RUPI app stopped registering new users. Source: Cointelegraph*

Sankar noted that the digital rupee pilot project has recorded 770,000 transactions across eight banks since the trial was launched on Dec. 1, 2022. The project is currently being carried out in five cities, with nine more cities potentially gradually joining the pilot soon. The official also said that five more banks are set to join the project in the near future.

As previously reported, RBI officially debuted a wholesale CBDC in November 2022, launching a retail CBDC a month later. The Indian government initially announced CBDC plans in early 2022, declaring that a digital rupee would be a “big boost” for India’s economy. The RBI then proposed a three-step graded approach for its rollout, aiming for little or no disruption to the traditional financial system.

India’s CBDC developments came years after countries like China started aggressive digital currency rollout in April 2020. Despite massive efforts to promote the use of CBDC, some former central bank officials claimed that the digital yuan’s usage has been low.

Crypto could spark the next financial crisis, says India’s RBI head

December 22, 2022 Coin Telegraph

CBDCs

Reserve Bank of India Governor Shaktikanta Das warned that if crypto becomes regulated and is allowed to grow, it could cause the next financial meltdown.

The governor of the Reserve Bank of India (RBI), Shaktikanta Das, did not mince his words when discussing the crypto sector at a recent conference, asserting that “private” crypto will be behind the next financial crisis.

Speaking at the Business Standard BFSI Insight Summit on Dec. 21, Das suggested that private crypto — those which are not issued by banks or governments — are backed by nothing and are purely tools for speculation.

"They have no underlying value. They have huge inherent risks for our macro economic and financial stability. I am yet to hear any credible argument about what public good or what public purpose it serves," he said.

*Shaktikanta Das Speaking at the Summit, Photo: Kamlesh Pednekar*

Adding to those sentiments, Das went on to suggest that a full scale crypto ban in India would be the best approach moving forward:

“It [private cryptocurrency trade] is a hundred percent speculative activity, and I would still hold the view that it should be prohibited … because, if it is allowed to grow, if you try to regulate it and allow it to grow, please mark my words, the next financial crisis will come from private cryptocurrencies.”

Highlighting examples of such risk, the RBI head pointed to the recent FTX implosion led by the freshly extradited Sam Bankman Fried.

"I don't think we need to say anything more about our stand after the developments over the last one year including the latest episode around FTX," he said.

Such comments mark another instance in which a key figure in politics or finance has blamed the crypto sector for FTX’s collapse, with many U.S. senators in particular taking the chance to slam digital assets over the past few weeks.

Das, of course, spoke in much more favorable terms of Central Bank Digital Currencies (CBDCs), as he emphasized that the RBI is actively pushing to get its digital rupee off the ground.

"You will see in days to come more and more central banks will embrace digital currencies and India has been in the forefront of the digital revolution in the current century,” he said.

The RBI has historically had a frosty view on crypto and questioned its value on several occasions. Das’ latest comments show that the sentiment is only getting worse, as the bank had previously ranked the sector at the bottom of its list of systemic risks as recently as June.

India’s Central Bank Digital Currency Should Be Able to Do Anything Cryptocurrency Can Do With No Risk, Official Claims

December 6, 2022 Bitcoin.com

RBI Begins First Retail Digital Rupee Pilot in 13 Indian Cities With 8 Banks

November 30, 2022 Bitcoin.com

First US State where you can no longer mine crypto: Law Decoded, Nov. 21-28

November 29, 2022 Coin Telegraph

Coin Telegraph

New York governor Kathy Hochul signed the moratorium, prohibiting any new mining operations that aren’t based on 100% renewable energy.

The state of New York became the first one in the United States to impose a moratorium on proof-of-work (PoW) mining, albeit only for two years. Last week, New York governor Kathy Hochul signed the moratorium into a bill, prohibiting any new mining operations that aren’t based on 100% renewable energy. The renewal of licenses would also be frozen. In eight months, the anti-mining bill made its way from the first passing through the state Assembly to the governor’s pen.

The statewide development seems unlucky for New York City mayor Eric Adams, who is focused on making the city a crypto hub. Commenting on the moratorium’s signing into law, Adams sounded more peaceful than he was in June when he promised to ask the governor of the state to veto the document. This time Adams pledged to work with the legislators “who are in support and those who have concerns” and come “to a great meeting place.”

At the end of the day, the state of New York remains perhaps the least welcoming place for crypto due to its regulatory regime: Not only do the miners have to get a fully renewable power source now, but the trading platforms are struggling since the hard-to-get BitLicense introduction in 2015. However, some officials believe the national crypto laws should look more like New York’s.

US senators urge Fidelity to reconsider its Bitcoin offerings

United States senators Elizabeth Warren, Tina Smith and Richard Durbin have renewed their calls for Fidelity Investments to reconsider offering a Bitcoin (BTC)-linked 401(k) retirement product. In a letter addressed to Fidelity Investments CEO Abigail Johnson, the three senators said the recent fall of FTX is more reason than any for the $4.5 trillion asset management firm to reconsider its Bitcoin offering to retirement savers.

The senators also added that “charismatic wunderkinds, opportunistic fraudsters, and self-proclaimed investment advisors” have played a huge role in manipulating the price of Bitcoin, which in turn has impacted 401(k) retirement savings holders who have invested in Fidelity’s Bitcoin product.

The Reserve Bank of India to launch a retail CBDC pilot in December

The Reserve Bank of India (RBI) is in the final stage of preparing the rollout of the retail digital rupee pilot. Each bank participating in the trial will test the central bank digital currency (CBDC) among 10,000 to 50,000 users. To integrate the new payment option, the banks will collaborate with PayNearby and Bankit platforms.

The CBDC infrastructure will be held by the National Payments Corporation of India (NPCI). Reportedly, at some point, the pilot is going to include all the commercial banks in the country. Earlier the RBI launched the wholesale segment pilot for the digital rupee, with the main use case being the settlement of secondary market transactions in government securities.

Tornado Cash developer to stay detained until next year’s hearing

A Dutch court hearing ruled that the Tornado Cash developer Alexey Pertsev would be held for another three months as the investigation continues. The prosecution outlined a broad overview of its investigation, painting Pertsev as a central figure in Tornado Cash’s operation before Advocate WK Cheng delivered his first defensive argument. The advocate confirmed that the first session has been postponed to Feb. 20, 2023, and reiterated his belief that the state had presented a one-sided interpretation of Pertsev’s involvement with Tornado Cash.

Turkey seizes FTX assets amid the ongoing investigation

Turkey’s Financial Crimes Investigation Board (MASAK) has seized assets belonging to Sam Bankman-Fried after launching an investigation into FTX’s affairs in the country. The Turkish investigatory body found that FTX TR failed to safely store user funds, embezzled customer funds through shady transactions, and manipulated supply and demand in the market by having customers buy and sell listed cryptocurrencies that were not backed by actual cryptocurrency holdings.

As a result of these findings, MASAK seized Bankman-Fried’s and affiliates’ assets after finding strong “criminal suspicion” on the above-mentioned points. A LinkedIn post from FTX TR noted that the exchange had over 110,000 users and processed an average monthly transaction volume of $500 million–$600 million since the launch of its mobile application earlier in 2022.

The Reserve Bank of India to launch a retail CBDC pilot in December

November 22, 2022 Coin Telegraph

CBDC

The digital rupee is intended as a supplement to the current payment system and not its replacement.

Having tested the wholesale usage of its central bank digital currency (CBDC), the Reserve Bank of India (RBI) is preparing to conduct the retail pilot of the “digital rupee.” The pilot should launch within a month.

According to the Economic Times of India, the RBI is in the final stage of preparing the rollout of the retail digital rupee pilot. Among the participants are the State Bank of India, Bank of Baroda, ICICI Bank, Union Bank of India, HDFC Bank, Kotak Mahindra Bank, Yes Bank and IDFC First Bank. Reportedly, at some point, the pilot is going to include all the commercial banks in the country.

Each bank participating in the trial will test the CBDC among 10,000 to 50,000 users. To integrate the new payment option, the banks will collaborate with PayNearby and Bankit platforms. The CBDC infrastructure will be held by the National Payments Corporation of India (NPCI). As the anonymous source specified to Indian journalists:

“The e-rupee will be stored in a wallet, the denominations will be available as per the customer’s request, just like you request cash from an ATM. Banks are launching this only in select cities.”

Both customers and merchants will have to download the special wallets for the CBDC, although later the RBI plans to fully integrate it with existing digital banking services. Reportedly, the digital rupee is intended as a supplement to the current payment system and not its replacement.

The wholesale segment pilot for the digital rupee was launched by RBI on Nov. 1. Its main use case has been the settlement of secondary market transactions in government securities. However, no information on the successful ending of the wholesale pilot is available at the time of writing.

India’s Central Bank RBI Starts Digital Currency Pilot With 4 Banks: Report

September 7, 2022 Bitcoin.com

Binance distances from WazirX as Indian regulators keep chasing crypto

August 15, 2022 Coin Telegraph

Binance

The ownership of WazirX became a hot topic as CZ claimed the deal never went through, but three years later, there’s still no clarity.

The Twitter exchange between WazirX co-founder Nischal Shetty and Binance CEO Changpeng “CZ” Zhao over the ownership of the Indian crypto exchange grabbed a lot of headlines in the first week of August.

WazirX was reportedly acquired by Binance in 2019, and ever since then, the Indian crypto exchange has been referred to as “Binance-owned”; however, to everyone’s surprise, CZ took to Twitter to claim that the acquisition process never went through and Binance has no ownership in the Indian crypto exchange.

2/ On 21 Nov 2019, Binance published a blog post that it had “acquired” WazirX. This transaction was never completed. Binance has never - at any point - owned any shares of Zanmai Labs, the entity operating WazirX.
— CZ Binance (@cz_binance) August 5, 2022

CZ said that Binance only provides wallet services for WazirX as a tech solution and WazirX is responsible for all other aspects of the exchange, including user sign-up, Know Your Customer (KYC), trading, and initiating withdrawals.

Shetty countered CZ’s claim in another tweet thread claiming that Binance indeed owns the Indian crypto exchange WazirX and that the parent company, Zanmai Labs, only operates crypto and Indian rupee pairs in WazirX on a Binance license. Binance, on the other hand, operates crypto-to-crypto pairs and processes crypto withdrawals, which can be verified by the companies’ terms of services.

The two co-founders went back and forth for the next couple of days accusing each other of misrepresenting certain facts.

2/ Original deal included sale of WazirX Technology (IP)

Same Technology was then licensed to Zanmai by Binance for INR market

Post licensing:

Binance operates crypto-crypto trading, crypto deposit/withdrawals

Zanmai operates INR-Crypto trading, INR deposit/withdrawal
— Nischal (Shardeum) ⚡️ (@NischalShetty) August 6, 2022

Based on the tweet exchange between the two co-founders, it is clear that there was indeed an acquisition deal, to begin with, but Shetty claimed the deal was for the technology transfer and not the whole company, and this is the reason WazirX technology is owned by Binance, while Zanmai Labs operate only crypto/INR pairs using a Binance license.

When Cointelegraph reached out to Binance to get some clarity on the acquisition deal, the exchange denied Shetty’s earlier claims that the exchange operates crypto-to-crypto trading pairs. A spokesperson from Binance told Cointelegraph:

“Binance does not operate crypto-to-crypto trades on the WazirX exchange. The WazirX exchange is wholly run and operated by Zanmai Labs. Further, while we did agree to purchase certain technical assets and intellectual property of WazirX, this agreement was not completed.”

In another tweet, CZ claimed that Binance had tried to pursue the acquisition as late as February but was refused by WazirX. Shetty again responded to the tweet, claiming the deal involved an acquisition by Binance’s parent entity, but at the time of the deal, Binance gave an “ambiguous answer that parent entity is under restructuring.”

The Binance spokesperson told Cointelegraph, “The agreement between Binance and Zanmai Labs was for the acquisition of certain assets and intellectual property of WazirX, not equity in Zanmai Labs.” They further added, “We had sought the assets that were supposed to be transferred to us under the agreement, but this was not forthcoming, and the agreement was not (and could not be) completed.”

WazirX, on the other hand, believes the solution to the current problem is either for Binance to buy out India operations using its parent entity instead of a random entity because it may create risk for users or for Binance to sell back WazirX.

Taking three years to disclose the deal never went through

The core reason for the fallout between the two companies seems to be the alleged money laundering investigation by India’s Enforcement Directorate (ED). The said investigation is from a year ago, and contrary to popular belief, the investigation is focusing on a Foreign Exchange Management Act (FEMA) violation rather than money laundering.

ED has issued Show Cause Notice to WazirX Crypto-currency Exchange for contravention of FEMA, 1999 for transactions involving crypto-currencies worth Rs. 2790.74 Crore.
— ED (@dir_ed) June 11, 2021

FEMA is one of many capital control regulations that the Indian government has put in place to prevent capital from leaving the country. According to FEMA, an individual is only permitted to send a maximum of $250,000 for specific purposes per year outside of India. However, due to the lack of regulations around the crypto market, FEMA laws don’t cover cryptocurrency transfers.

As a result, any users sending crypto transfers of above $250,000 would still violate FEMA laws. That seems to be the case with the ED’s current investigation into WazirX. In total, 10 other crypto platforms are facing similar investigations from the ED.

Crypto investment is not one of them. But technically, if to send more than the set amount, even in crypto, it would be a violation of FEMA. Therefore, when transferring funds to an exchange that is not India-domiciled, it is seen as a violation of FEMA regulations.

The year-old investigation made headlines again in 2022 followed by the ED freezing $8.1 million worth of the exchange’s assets. The ED claimed that it couldn’t find on-chain records of transactions amounting to millions of dollars. However, WazirX contradicted ED’s claim and said it has records for every single transaction.

The off-chain transactions referred to by the ED are the direct transfer between WazirX and Binance, a feature introduced by the two parties as part of the partnership. The feature allows the transfer of assets between two exchanges without users having to pay any transfer fee.

WazirX in its official statement claimed that there was a major misunderstanding surrounding the off-chain transfers. The crypto exchange said that an ED’s press release is trying to deem these transitions as mysterious and untracked, while in reality, only KYC users of the platform can use the services. Thus, there is no question about untraced funds, and WazirX said it was confident in proving ED wrong in the court of law.

pic.twitter.com/9GzoNF61yi
— WazirX: India Ka Bitcoin Exchange (@WazirXIndia) August 9, 2022

Binance eventually shut down the direct bridge between the two platforms on Aug. 11 and notified its users in advance while reminding them that they can still transfer funds to WazirX using standard wallet transfers.

While both Binance and WazirX have assured full cooperation with the investigation, a source familiar with the issue who chose to remain anonymous told Cointelegraph that the investigation spooked Binance, which eventually led to the fallout. Binance later confirmed to Cointelegraph that the ED investigation compelled it to inform its users. A Binance spokesperson described the issues to Cointelegraph:

“We encountered issues with Zanmai Labs. We have tried to work with them to find a resolution for some time. The recent news about the ED investigations and notices on Zanmai is also material developments. We felt the need to clarify this in the interests of user protection.”

Will the Binance–WazirX saga impact Indian crypto investors?

The Binance–WazirX saga created a panic among Indian investors who were using WazirX. Many of these traders liquidate their assets immediately after the war of words between the two co-founders erupted. The sentiment only got worse, with CZ prompting users to transfer their assets to Binance.

WazirX told Cointelegraph that there were some signs of liquidation and movement of funds in the aftermath of the tweets, but after assuring users that their funds would be safe, the exchange said the trend has been on a decline.

Indian crypto entrepreneurs believe that, regardless of who is at fault, the barrage of words on social media did impact investor confidence. Sathvik Vishwanath, the co-founder of the Indian crypto exchange Unocoin, told Cointelegraph that “such fracas affects the crypto market, including its investors.” He added further:

“This kind of action in the crypto market poses a negative impression on the whole ecosystem, but the issue seems reversible. Either they need to complete the transaction or undo the transaction and should publicly identify the owners. Transparency is the key here that seems to be missing.”

The Indian crypto ecosystem had thrived until now and produced several crypto unicorns over the past few years; however, with the implementation of a 30% crypto tax and 1% tax deduction at source this year, the trading volume on major Indian crypto exchanges has slumped dramatically. The newly implemented tax rules didn’t just deter Indian investors but also prompted several leading crypto services providers to look for crypto-friendlier jurisdictions.

The Indian central bank has always called for a ban on crypto use in any form, while the central government has changed its stance over time without offering any regulatory framework. Amid growing complexities for the Indian crypto ecosystem, many market pundits believe the current Binance–WazirX saga could be used by Indian law agencies and the central bank to build a case against crypto regulations.

US senators urge Fidelity to reconsider its Bitcoin offerings

The Reserve Bank of India to launch a retail CBDC pilot in December

Tornado Cash developer to stay detained until next year’s hearing

Turkey seizes FTX assets amid the ongoing investigation

Taking three years to disclose the deal never went through

Will the Binance–WazirX saga impact Indian crypto investors?

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