The Reserve Bank of India (RBI) has once again voiced its strong opposition to cryptocurrencies, reaffirming its view that the country’s crypto policy should ultimately lead to a ban. According to internal government documents reviewed by Reuters, the central bank is leaning toward prohibition, citing threats to financial stability, monetary sovereignty, and the dangers posed by privately issued stablecoins.
RBI argues that banks and financial institutions should be prohibited from holding, trading, or having any exposure to cryptocurrencies and stablecoins like USDT and USDC. The regulator sees a ban as essential to keeping digital assets outside the formal financial system. It specifically flags foreign currency-pegged stablecoins as a risk to domestic monetary autonomy, while rupee-backed tokens could erode government seigniorage income and destabilize the financial system during stress periods.
India has not yet fully banned crypto trading, but the sector remains in a regulatory grey zone. Major lenders avoid direct crypto exposure after multiple central bank warnings, even though there is no explicit legal prohibition. The RBI’s stance is a continuation of its 2018 attempt to ban banks from dealing with crypto exchanges—a move later overturned by the Supreme Court in 2020. Since then, the government has been deliberating a comprehensive framework with no final decision.
Adding to the pressure, the country’s tax department reported that crypto transactions are increasingly hard to track, especially when routed through offshore exchanges or peer-to-peer trades. Officials noted that fewer than 25% of the 645,000 individuals who engaged in crypto transactions in 2023 reported them on tax returns. With a 30% tax on gains, compliance is complicated by valuation gaps and unclear ownership on overseas platforms.
While several key government agencies align with the RBI’s hardline stance, the government has yet to finalize an official policy. The ongoing uncertainty leaves India’s millions of retail investors and crypto startups in limbo, with potential global market implications given the country’s status as one of the largest crypto adoption hubs.
