current affairs 2025

India’s Digital Currency & Blockchain Revolution (2025)

by Prince Luthra Sir (UPSC CSE AIR 577) · 27 February 2025

8️⃣7️⃣ India’s Digital Currency & Blockchain Revolution (2025) 💰🔗

🔹 Introduction

India is leading the way in digital currency adoption and blockchain technology, focusing on Central Bank Digital Currency (CBDC), decentralized finance (DeFi), and blockchain-powered governance. The Digital Rupee (e₹), launched by the Reserve Bank of India (RBI), is transforming financial transactions, cross-border trade, and digital payments.

With rapid developments in smart contracts, AI-driven blockchain security, and decentralized applications (dApps), India is positioning itself as a global hub for blockchain innovation. However, challenges like crypto regulation, cybersecurity risks, and financial inclusion barriers remain.

🔹 Key Developments in India’s Digital Currency & Blockchain Expansion (2025)

✅ RBI’s Digital Rupee (CBDC) & Payment Innovations 💳

Digital Rupee (e₹) pilot expanded to retail and wholesale transactions.
AI-powered fraud detection integrated into RBI’s blockchain payment system.
Cross-border trade settlements enabled through CBDC with UAE & Singapore.

✅ Blockchain for Governance & Digital Identity 📜

Aadhaar-linked blockchain system for secure citizen records.
Smart contracts deployed for land registry & digital notarization.
Blockchain-based public voting trials conducted for secure elections.

✅ Decentralized Finance (DeFi) & Crypto Regulations ⚖️

RBI and SEBI create regulatory framework for DeFi lending & stablecoins.
India classifies cryptocurrencies as digital assets under financial laws.
Blockchain-based KYC (Know Your Customer) streamlining financial compliance.

✅ Blockchain in Supply Chain & Cybersecurity 🏭

Blockchain-integrated logistics for transparency in supply chains.
AI-powered blockchain security enhancing cybersecurity in banking.
Tokenized digital assets introduced for real estate & investment markets.

✅ Challenges in India’s Digital Currency & Blockchain Growth ⚠️

Regulatory uncertainty regarding crypto taxation & DeFi compliance.
Scalability issues in blockchain infrastructure for mass adoption.
Cybersecurity threats in decentralized finance & digital payments.

📌 Advanced 3-Statement-Based MCQs on India’s Digital Currency & Blockchain (2025)

1️⃣ Consider the following statements regarding India’s Digital Rupee (CBDC):

RBI has expanded the Digital Rupee (e₹) for retail and wholesale transactions.
AI-based fraud detection is integrated into blockchain payment systems.
India has banned all forms of digital currency, including CBDC and stablecoins.

Which of the above statements is/are correct?
A) 1 and 2 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2, and 3

Tap here for Answer

Answer: A) 1 and 2 only

Explanation:

RBI’s Digital Rupee pilot has expanded to multiple sectors, including retail and trade settlements (Correct).
AI-driven fraud detection is enhancing security in blockchain-based financial transactions (Correct).
India regulates cryptocurrencies but has not banned digital currency innovation, including CBDCs (Incorrect).

2️⃣ Consider the following statements regarding blockchain technology in governance:

Aadhaar is now integrated with blockchain for secure digital identity management.
Smart contracts are being used for land records and notarization processes.
India has completely transitioned to blockchain-based voting for all elections.

Which of the above statements is/are correct?
A) 1 and 2 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2, and 3

Tap here for Answer

Answer: A) 1 and 2 only

Explanation:

Aadhaar integration with blockchain enhances security for citizen records (Correct).
Smart contracts are being tested for digital land registration and verification (Correct).
Blockchain-based voting is still in the pilot phase and not yet deployed for national elections (Incorrect).

3️⃣ Consider the following statements regarding India’s decentralized finance (DeFi) regulations:

RBI and SEBI are working on a regulatory framework for DeFi lending and stablecoins.
Cryptocurrencies are legally classified as digital assets in India.
India has made decentralized finance (DeFi) fully legal without any regulatory oversight.

Which of the above statements is/are correct?
A) 1 and 2 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2, and 3

Tap here for Answer

Answer: A) 1 and 2 only

Explanation:

Regulators like RBI and SEBI are working on frameworks for DeFi and stablecoins (Correct).
India classifies cryptocurrencies as digital assets under specific financial regulations (Correct).
DeFi is regulated under financial laws, ensuring investor protection and compliance (Incorrect).

4️⃣ Consider the following statements regarding blockchain applications in supply chains and cybersecurity:

Blockchain technology is improving supply chain transparency in logistics.
AI-driven blockchain security is strengthening banking cybersecurity.
India has fully eliminated cyber fraud using blockchain-based systems.

Which of the above statements is/are correct?
A) 1 and 2 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2, and 3

Tap here for Answer

Answer: A) 1 and 2 only

Explanation:

Blockchain enhances traceability and transparency in supply chain management (Correct).
AI-powered cybersecurity solutions are integrated with blockchain to prevent fraud (Correct).
Cyber fraud prevention is improving but has not been completely eliminated (Incorrect).

5️⃣ Consider the following statements regarding challenges in India’s blockchain and digital currency ecosystem:

Regulatory uncertainty exists around crypto taxation and DeFi compliance.
Blockchain infrastructure scalability remains a challenge for mass adoption.
India has completely secured its blockchain systems from cybersecurity threats.

Which of the above statements is/are correct?
A) 1 and 2 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2, and 3

Tap here for Answer

Answer: A) 1 and 2 only

Explanation:

Crypto taxation and DeFi regulations are evolving, creating uncertainty for businesses (Correct).
Blockchain scalability remains a key challenge for handling high-volume transactions (Correct).
Cyber threats persist, and blockchain networks require continuous security upgrades (Incorrect).

🚀 Conclusion

India’s blockchain revolution and digital currency expansion are driving innovations in finance, governance, and cybersecurity, but regulatory clarity, infrastructure scalability, and cyber risks need further attention. With continued policy support, global collaborations, and AI-driven security advancements, India is on its way to becoming a major player in blockchain and digital finance.