Cryptocurrency

Story hook

On 1 December 2022, a small group of customers at the State Bank of India's Connaught Place branch did something no Indian had ever done before. They opened a new app on their phones, picked up a digital token of ₹500, walked across the road to a tea-seller's stall, and paid for chai with what looked like a regular UPI transfer but was, in fact, money issued directly by the Reserve Bank of India in its own digital form. No bank ledger sat in between. The token was a digital ₹500 note — sovereign liability of the RBI, transferable peer-to-peer.

That afternoon, the e-Rupee (e₹) went live in retail pilot in four cities — Mumbai, New Delhi, Bengaluru, Bhubaneswar — and four banks — SBI, ICICI, Yes Bank, IDFC First. Within 18 months, the pilot had 5 million users, 16 participating banks, 300+ cities, and a daily transaction volume that touched a peak of 10 lakh per day in December 2023 before settling lower.

While the e₹ was being launched, the Crypto Bill — drafted, redrafted, and shelved across 2018, 2019, 2021, 2022 — remained in limbo. Bitcoin prices in India crossed ₹85 lakh (Dec 2024). A 30% flat tax + 1% TDS on virtual digital assets had crushed Indian exchange volumes by ~95% since 2022. The world's largest democracy was running two parallel digital-money experiments — one official, one tolerated-but-taxed — and the UPSC syllabus had to capture both.

Why this matters for UPSC

Cryptocurrency and CBDC are the freshest GS-III economy frontier — high-probability Prelims MCQs since 2018 (CCEs in 2018, 2020, 2022, 2023 all tested CBDC / VDA terminology). Mains questions on digital currency, monetary sovereignty, and crypto regulation have appeared in 2022 and 2023. Interview boards routinely ask candidates' views on whether crypto should be banned, regulated, or accepted as legal tender.