Despite the increasing acceptance of digital assets globally, Indian regulators remain steadfast in their restrictive stance.
By Omkar Godbole|Edited by Sheldon Reback Jul 8, 2026, 9:45 a.m. 2 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred on The Indian central bank maintains its anti-crypto stance. (Naveed Ahmed/Unsplash)SummaryShow- The Reserve Bank of India and other regulatory bodies are advocating for a prohibition on cryptocurrencies despite the rising global adoption and the presence of millions of domestic investors.
- The RBI has expressed concerns over banks' involvement with cryptocurrencies and stablecoins, citing risks of financial contagion and potential stress in volatile markets.
- Tax officials highlighted issues with the underreporting of crypto earnings and challenges in tracking transactions, suggesting that cryptocurrencies could exacerbate capital outflows and worsen India's external deficit.
The global trend toward embracing tokenization, stablecoins, and blockchain technology is gaining traction among governments and financial institutions. However, Indian authorities remain unyielding, adhering to a long-standing opposition to cryptocurrencies.
The Reserve Bank of India is persisting with its policy direction that leans towards prohibition, with government documents indicating that the tax department is worried about significant compliance issues, as reported by Reuters.
This stance continues despite the presence of approximately 39 million cryptocurrency investors in India, which has a population nearing 1.5 billion, and an estimated $2.1 billion in digital asset holdings as of May.
The RBI has consistently argued that banks and financial organizations should be prohibited from engaging with cryptocurrencies and privately issued stablecoins to mitigate risks to the financial system.
The central bank is also wary of stablecoins pegged to the rupee, in addition to those linked to the dollar, cautioning that they could diminish seigniorage and lead to instability during market fluctuations.
CoinDesk reached out to the RBI for further comment.
Tax authorities are increasingly concerned about widespread underreporting. In the fiscal year ending March 2023, less than 25% of the 645,000 individuals who engaged in cryptocurrency transactions reported their earnings on tax filings.
Transactions on offshore exchanges and peer-to-peer platforms, particularly those in rupees, pose significant challenges for tracking and taxation.
Since the Supreme Court annulled the RBI's 2018 ban, Indian cryptocurrency investors have been operating in a regulatory grey area, where the status is neither explicitly illegal nor fully regulated. A proposed bill to ban private cryptocurrencies in 2021 was never tabled, and discussions regarding policy have faced numerous delays.
While the government has indicated a desire to balance innovation with risk management, recent internal documents imply that key agencies remain reluctant to adopt digital assets.
India's hesitation can be partly attributed to its significant reliance on energy imports and ongoing current account deficits. This vulnerability was recently highlighted when tensions with Iran led to increased oil prices, inflating the energy import costs and driving the rupee to historic lows. Authorities fear that widespread cryptocurrency adoption could hasten capital outflows, bypassing traditional banking systems and exacerbating the external deficit.
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SpaceX IPO Drives Tokenized Equity Volumes to Record as Stablecoin Market Cap Falls
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Stablecoin market cap fell to $312B in June, its largest monthly drop since TerraUSD, while tokenized equity volumes surged 145% to a record $3.86B.
By CoinDesk Research21 hours agoStablecoin market cap fell to $312B in June, its largest monthly drop since TerraUSD, while tokenized equity volumes surged 145% to a record $3.86B.
Why it matters:
Stablecoin market cap fell to $312B in June, its largest monthly drop since TerraUSD, while tokenized equity volumes surged 145% to a record $3.86B.
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