India’s central bank has told a parliamentary finance committee it is not shifting from its cautious approach to cryptocurrency, and a complete ban remains a viable policy option. Reserve Bank of India officials conveyed this during discussions with house members this week, signaling that despite growing investor demand and tech industry appeals for an open regulatory framework, the RBI intends to hold its restrictive line.
The RBI’s position reflects concerns that have accumulated over several years. Officials flagged risks around money laundering, terrorism financing, and the use of digital currencies outside traditional banking oversight. The central bank also worries that opening crypto could weaken the rupee and create parallel financial systems that escape regulation. By restating these views directly to lawmakers, the RBI is making clear it sees no imminent reason to change course.
India currently lacks a dedicated cryptocurrency law. Instead, digital asset gains are taxed as income, and banks have been discouraged from servicing crypto businesses. This creates a grey zone where millions trade in Bitcoin and other digital assets despite regulatory uncertainty, betting that rules will eventually open. The RBI’s continued emphasis on containment puts it at odds with crypto advocates and parts of the tech industry, who argue that regulation would be safer than a ban. Some point to countries like El Salvador, which made Bitcoin legal tender, and others that have created licensing systems for exchanges.
The RBI counters that India’s financial systems are still developing, and early crypto adoption could create instability. Global crypto markets have stabilized after major collapses in 2022, and some countries have moved toward regulation rather than bans. India appears committed to a more restrictive path. The RBI’s choice to reaffirm its stance to lawmakers suggests the central bank expects continued pressure and wants to signal consistency.
What happens next depends on whether Parliament moves toward a cryptocurrency bill. The RBI’s statement this week leaves little room for compromise: the central bank has made clear it will resist demands to ease restrictions, and if legislation does come, the RBI is prepared to defend containment or an outright ban as the safer option for India’s financial system.
Source: ET Economy
