The Reserve Bank of India (RBI) has once again urged the government to take a tougher stance on crypto, backing a nationwide ban rather than introducing a regulatory framework for the sector.
This comes as the central bank says that digital assets pose risks to India’s financial system and monetary policy. Rather than regulating cryptocurrencies, the RBI wants banks and other financial institutions barred from dealing with crypto-related businesses or holding exposure to digital assets and privately issued stablecoins.
The RBI also warned that foreign currency-backed stablecoins could undermine India’s control over its monetary system.
The renewed push comes after reports that Indian authorities are weighing stricter banking rules for the crypto industry. The proposed measures would further limit banks’ role in supporting crypto-related activities, reflecting the RBI’s long-standing opposition to privately issued digital assets.
The central bank believes that restricting the banking sector’s exposure would help contain financial risks while policymakers continue debating the country’s long-term approach to crypto regulation.
India Still Undecided on Crypto Ban
India currently has no law banning cryptocurrencies. The country’s Supreme Court overturned the RBI’s banking restrictions on crypto businesses in 2020, allowing exchanges to resume operations. However, the sector remains heavily taxed, with a 30% levy on crypto gains and a 1% tax deducted at source (TDS) on transactions.
The latest proposal comes as several countries continue to adopt regulatory frameworks for digital assets instead of imposing outright bans.
While jurisdictions such as the European Union, Singapore, and Japan have introduced crypto regulations, India’s central bank maintains that stricter restrictions are necessary to safeguard the country’s financial stability.
The government’s final position on the matter remains unclear, leaving the future of crypto regulation in India uncertain.
RBI Flags Stablecoin Risks
Separately, the RBI warned that stablecoins could create additional risks. It said foreign currency-backed stablecoins may undermine India’s monetary sovereignty, while rupee-backed versions could reduce the government’s currency-related revenue and increase financial stability risks during periods of market stress.
The central bank also argued that greater stablecoin adoption could make crypto profits harder to monitor and tax because investors would have less need to convert digital assets into fiat currency.
With the RBI pushing for stricter measures, attention now turns to whether the government will translate those recommendations into law or continue leaving the crypto sector in regulatory uncertainty.
