Digital Rupee vs. Bitcoin: Is Co-existence India's New Reality?
Khushi V Rangdhol Jun 10, 2025 02:47
India's digital rupee and Bitcoin may coexist, with e-rupee gaining traction and crypto remaining popular despite high taxes. A future of regulated integration looms.
At a café in Delhi, 24-year-old Priya Shah swaps effortlessly between two apps: one stores e-rupees she uses for bus fares and a cash-back coffee voucher, the other holds a modest stack of Bitcoin she buys each payday. Her “metro-card versus moon-shot” routine sums up the policy puzzle now confronting India: can a state-run central-bank digital currency (CBDC) and a permission-less crypto asset thrive side-by-side?
Where the e-rupee stands today
The retail pilot that began on 1 December 2022 has widened faster than any other CBDC outside China. RBI data and recent press briefings put active users at roughly six million, served by 17 banks, with e-rupee worth ₹1,016 crore in circulation—a steep climb from 600 000 users a year earlier.
Transaction momentum has been harder to sustain. Banks hit the RBI’s goal of one million retail transactions a day in December 2023, helped by giveaways and partial salary credits, but volumes slid to about 100 000–200 000 a day once incentives ended. To rekindle demand the central bank is testing offline transfers and “programmable” tokens—vouchers that can be spent only on specified goods—plus a UPI link that would let any QR terminal accept e-rupees.
Practical use-cases are emerging. Odisha’s Subhadra Yojana became India’s first welfare scheme to pay its ₹10 000 annual benefit in e-rupees, and two state-owned banks now deliver a slice of staff salaries in digital cash each month. On the private side, Cred plugged in this January and PayPal-backed Mintoak bought a CBDC specialist in March, signaling future “Pay with e₹” buttons at checkout.
The RBI charges no merchant discount rate, mirroring the zero-fee policy that helped UPI dominate retail payments. Every wallet, however, is KYC-tagged—good for compliance, less so for privacy.
Bitcoin’s counter-story
Even with a 30 % gains tax and a 1 % TDS that clips liquidity, crypto refuses to fade. Trading on India’s four biggest exchanges doubled to $1.9 billion in Q4 2024, driven largely by traders in Nagpur, Jaipur and Lucknow. When the rupee sank to a record ₹86.58 per dollar in mid-January 2025, order-book data show a spike in BTC rupee pairs. Young investors increasingly treat weekly “sat-stacking” plans on apps such as CoinDCX like a recurring deposit.
The flip side is risk. A July 2024 breach drained about $235 million from WazirX—India’s own Mt Gox moment and the country’s biggest crypto hack to date.
Policy temperature check
In February 2022 RBI Deputy Governor T. Rabi Sankar dismissed private crypto as “akin to Ponzi schemes.” Yet a year later he conceded the bank could only “offer something better, not forbid ownership.” That softer line is echoed by the market watchdog: a leaked submission shows SEBI wants a multi-agency framework in which it, the RBI and the Financial Intelligence Unit share oversight—a stance closer to Europe’s MiCA model than to an outright ban.
The taxman remains unmoved. Budget 2025 left the 30 % levy and 1 % TDS untouched, and fresh provisions now allow a punitive 60 % hit on undeclared gains.
Likely direction
Regulators appear to be steering toward a “guard-railed coexistence.” Expect wider offline roll-outs aimed at hundreds of millions of feature-phone users, tighter KYC on crypto off-ramps, and a long-awaited discussion paper—due later this year—that could import MiCA-style licensing while preserving India’s high tax bite and tough stable-coin rules.
For ordinary users that means: pay your rent or grab a subsidised LPG cylinder in e-rupees; dollar-cost average into Bitcoin if you wish, but keep immaculate tax logs and stay on exchanges that plan to seek a SEBI licence. The metro-card and the moon-shot may not love each other, but in today’s India they finally look ready to share the same wallet.
Image source: Shutterstock.jpg)
