The Reserve Bank of India (RBI) has renewed its recommendation for a cryptocurrency policy leaning toward prohibition. According to internal government documents, the RBI has reiterated its long-standing position that cryptocurrencies and privately issued stablecoins should remain outside the regulated financial system.
The central bank argued that keeping digital assets outside the regulated financial system would reduce the risk of financial contagion. The RBI also warned against stablecoins, stating that foreign currency-backed stablecoins could weaken India’s monetary sovereignty, while rupee-backed tokens could reduce revenue generated from issuing fiat currency and create financial stability risks.
Tax Reporting Concerns
The Income Tax Department has raised concerns over gaps in reporting and the difficulty of tracing transactions conducted through overseas exchanges and private wallets. Documents show that fewer than one quarter of the 645,000 individuals who carried out cryptocurrency transactions during the financial year ending March 2023 disclosed those transactions in their income tax returns.
Regulatory Scrutiny
India has operated without a dedicated cryptocurrency law since the Supreme Court struck down the RBI’s 2018 banking restrictions in 2020. Despite this, regulatory scrutiny has continued through other channels, with the Financial Intelligence Unit instructing several major crypto exchanges to preserve records of over-the-counter cryptocurrency transactions exceeding $10,000 from January 2026 onward.
Market Impact
India remains one of the world’s largest cryptocurrency markets, with nearly 39 million Indians holding about $2.1 billion worth of digital assets at the end of May. The Ministry of Corporate Affairs is examining accounting standards and other guidance for virtual digital assets as discussions over the country’s long-term crypto policy continue.
Based on reporting from crypto.news.
