This study provides a systematic review that explores the specific aspects of digital currencies relative to other factors such as innovation, legal frameworks, and sustainability. It looks at how new digital monetary systems can be adapted towards sustainable economic growth while skillfully manoeuvring through regulatory and institutional chasms. With a conceptual and theoretical approach that intertwines financial innovation with environmental objectives and legal governance, the study examines policies, institutional frameworks, and global developments. It is apparent from the research findings that digital currencies, particularly Central Bank Digital Currencies (CBDCs), have potential towards enabling sustainable green finance, enhanced financial inclusion, and more transparent and lower-carbon economic systems. This paper identifies the potential and the challenges of applying the opportunities for using digital currencies in maintaining sustainable economies and offers flexible policy approaches that could ease their application.