India’s central bank has renewed its cautious position on private cryptocurrencies while signaling stronger support for tokenization, distributed ledger technology and central bank digital currency initiatives. Speaking at the Kautilya Economic Conclave in New Delhi on Oct. 3, Reserve Bank of India Governor Sanjay Malhotra said India remains wary of crypto because of risks involving monetary sovereignty, monetary policy, capital flows and the “singleness of money.”
Malhotra said financial innovation should preserve settlement finality, financial integrity and the singleness of money. He questioned whether private cryptocurrencies are needed for domestic payments, pointing to India’s fast and low-cost payment infrastructure. He added that cross-border payments remain the harder problem, and central bank digital currency links between regulated payment systems could provide another route.
The RBI is moving ahead with regulated tokenization projects. Malhotra outlined work involving programmable CBDCs, tokenized certificates of deposit and corporate bonds settled through the wholesale digital rupee. The Securities and Exchange Board of India announced the launch of its Demat 2.0 pilot for tokenized corporate bonds on Sept. 10. India’s first digital-rupee-settled tokenized bond transactions involved ₹1,025 crore across three issuances: REC raised ₹500 crore, Larsen & Toubro issued ₹500 crore, and IIFL completed a ₹25 crore transaction.
India has not enacted a comprehensive crypto law. Trading continues under tax and anti-money-laundering rules, while the Financial Intelligence Unit-India issued notices to 15 offshore virtual asset service providers in September, including Weex, Blofin, DigiFinex, WOO X, WhiteBIT and ChangeNow. Authorities requested takedowns of apps and URLs accessible to Indian users.
A separate Chainalysis report highlighted the competitive gap for Indian exchanges. India-based users accounted for $88.4 billion in centralized-exchange inflows over the year through June 2026, the largest such market in Central, Southeast Asia and Oceania. Yet domestic platforms received only 0.7% of exchange value received, down from roughly 7% before a sharp decline in mid-2022. By contrast, Brazil-based exchanges received 12.5% of inflows.
Chainalysis and industry executives cited India’s 1% tax deducted at source on virtual digital asset transfers as a major friction. CoinSwitch co-founder Ashish Singhal told Chainalysis that tax friction helps explain offshore use, noting that foreign venues may not make the deduction. The report said India’s large attributed exchange market can coexist with a small domestic-platform foothold, while the destination of inflows remains distinct from national participation.
