The Reserve Bank of India (RBI) is continuing to push for banks and other regulated financial institutions to stay away from cryptocurrency-related activities, warning that digital assets could pose risks to the country’s financial system.
The move reflects India’s cautious approach to crypto, as authorities try to limit its use while continuing to collect tax revenue from digital asset trading.
Currently, the government has already collected over $190 billion in taxes in the last financial year.
The bank made its position clear indication that crypto should not be used to make payments.
According to the bank’s Deputy Governor, Rohit Jain, and the Executive Director, P. Vasudevan, the central bank remains concerned about the risks involved with crypto.
RBI has also proposed an approach that will help the banks to stay away from crypto, even as they allow stablecoin and regulation on tokenization.
India Moves to Isolate Banks From Crypto
According to the RBI, crypto should not be treated like normal financial products. The bank warned that doing so would create the false impression that crypto and other digital assets are safe or have official backing.
The central bank also added that its concerns are driven by the growing use of digital assets in financial crimes. During the 2024–25 financial year, 49 cryptocurrency exchanges were registered with the Financial Intelligence Unit (FIU).
The agency also identified crypto transactions linked to scams, cyber fraud, illegal gambling, unreported cross-border money transfers, and the misuse of peer-to-peer platforms. With these risks, the RBI believes that restricting or banning certain crypto-related activities is the best option.
The RBI also made it clear that it is not against blockchain technology itself. Instead, the central bank wants policymakers to clearly separate cryptocurrencies from tokenized financial assets, such as government bonds and corporate bonds.
This would allow tokenization to grow without encouraging wider crypto adoption. Even with the RBI’s cautious stand, crypto trading remains legal in India, although cryptocurrencies are not recognized as legal tender.
Despite this, investors will still pay a 30% tax on crypto profits and a 1% TDS on every transaction.
The government is also increasing oversight of the sector, including a direction that major crypto exchanges report over-the-counter (OTC) transactions worth more than $10,000, showing that the country is tightening regulations rather than moving toward a complete ban.
