Digital Rupee vs Crypto: What the debate misses about the future of money

India is in the midst of a silent revolution in money. On one hand, we have the Digital Rupee, the Reserve Bank of India’s Central Bank Digital Currency (CBDC), and on the other, the rapidly growing world of crypto-assets and stablecoins operating on public blockchains.

Both are vying to redefine how value is transferred in the digital age. And yet, the ongoing debate—often framed as CBDC vs Crypto—misses the point entirely. Because the real question is not about which technology wins, but who benefits from it.

When the debate gets wrong

Public discourse often pits the Digital Rupee and crypto against each other—as if they are fundamentally incompatible. The truth is, both are programmable forms of digital money, designed for different purposes, but potentially coexisting in the same future financial system.

• The Digital Rupee is a sovereign, state-backed currency that retains all the regulatory control of fiat, with some of the benefits of digital settlement—speed, transparency, and auditabilit.
  

• Crypto, especially stablecoins and DeFi protocols, represents open, global finance—designed to reduce reliance on intermediaries, enable 24/7 global settlement, and allow innovation at the edges.

But focusing only on the instruments is missing the forest for the trees. What matters most is the end user’s experience.

For the user, convenience is king

Whether it’s a CBDC or a stablecoin, the average Indian citizen wants:

• Instant settlement
  
• Low transaction fees
  
• Universal acceptance
  
• Interoperability across borders
  
• Clear privacy and control over their funds
  

If the Digital Rupee delivers this, it wins. If crypto and stablecoins can do it better, they will continue gaining ground—especially among tech-savvy users, freelancers, SMEs, and NRIs.

So far, Digital Rupee usage is modest—with just 19 banks live and around 100,000 daily transactions reported in mid-2024. By comparison, UPI clocks 350 million+ transactions a day, and stablecoins globally settled over $7 trillion in 2023.

The bigger problem: Not who builds it, but who controls it

Let’s zoom out. India built UPI—arguably the most successful public payments infrastructure in the world. But despite being a product of NPCI (a quasi-government entity), UPI adoption is now dominated by three major apps:

• Google Pay
  
• PhonePe (majority owned by Walmart)
  
• Paytm (with large foreign ownership)
  

Together, these three control over 94% of UPI transaction volume.

So while UPI is Indian in origin, the monetization, data leverage, and platform control rests in the hands of foreign-backed companies. Indian startups in the payments space face high entry barriers, and the market has become increasingly difficult to penetrate due to high compliance, capital, and branding costs.

If India repeats the same model with the Digital Rupee—where state infrastructure is handed over to foreign-led platforms for distribution—we will be building Indian rails for global profits, again.

India needs a strategic payments agenda

To avoid this, India must learn from UPI’s journey:

• Create favorable policies and early access for Indian startups to build on top of the Digital Rupee.
  
• Ensure neutral interoperability layers so no single app dominates wallet access or merchant onboarding.
  
• Offer incentives and sandboxes for fintechs and Web3 startups to create novel CBDC use cases in sectors like trade, MSME finance, insurance, and mobility.
  
• Consider public-private models where infrastructure remains open but innovation is encouraged locally.
  

After all, payments aren't just a technical tool—they are an instrument of economic sovereignty. And whoever controls the interface to money, controls much more than just transactions.

It’s not Crypto vs CBDC. It’s about empowering Indians

At the end of the day, the user doesn’t care whether their money comes from a central bank node or a smart contract. They care about speed, cost, and usability.

• A Digital Rupee that settles instantly, works offline, and integrates with UPI? Excellent.
  
• A crypto wallet that lets an Indian freelancer receive USD-stablecoins from a US client and cash out into INR at low cost? Also excellent.
  

The key is not to fixate on the rails, but to ensure that the value stays in India, and Indian entrepreneurs are not locked out of building the future. Because if we don’t, we risk creating another UPI story—built by India, but controlled by others. And that’s a mistake we can’t afford to make twice.

(The author, Aishwary Gupta is the Global Head of Payments & Real World Assets at Polygon Labs)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)