India crypto rules still in limbo as RBI says ‘no thanks’

Despite mounting pressure for regulatory clarity, the Reserve Bank of India remains firmly opposed to cryptocurrencies, citing risks to monetary policy and financial stability.

RBI Governor Sanjay Malhotra reaffirmed the central bank’s stance even as a government committee reviews policy options and the Supreme Court presses for clearer guidelines. The tension highlights India’s ongoing regulatory deadlock, where legal, judicial, and financial forces continue to clash over the future of digital assets.

Malhotra underlined during a news conference following the announcement that the RBI is still concerned about the possible threats that cryptocurrencies could pose to monetary policy and financial stability.

“RBI has maintained a consistent stance on this issue. A [government] committee is currently examining the matter. We remain concerned about the potential risks crypto poses to financial stability and monetary policy,” Malhotra said .

The comments come as a government committee continues examining cryptocurrency regulation. India is also expected to release a comprehensive policy discussion paper in June 2025 following mounting pressure from the Supreme Court for regulatory clarity.

India’s Supreme Court pushes for comprehensive regulation

In recent proceedings, the Supreme Court has questioned the government’s delay in establishing clear cryptocurrency policies. The justices also noted the absence of proper regulatory frameworks has created confusion in the digital asset space.

Given the advancements in the global financial system, a Supreme Court bench led by Justices Surya Kant and N Kotiswar Singh stated that prohibiting cryptocurrencies is not feasible.

The country has maintained an ambiguous stance since the Supreme Court overturned RBI’s 2018 banking ban on cryptocurrency transactions in March 2020.

India’s cryptocurrency regulation saga began in 2018 when RBI issued a circular prohibiting banks and financial institutions from providing services to cryptocurrency businesses.

The prohibition was later struck down by the Supreme Court in March 2020. The court ruled that the banking ban was disproportionate and violated constitutional rights under Article 19(1)(g) of the Indian Constitution.

Following the court ruling, RBI instructed banks not to block cryptocurrency transactions based on the invalidated circular. This provided a temporary relief to the crypto industry.

RBI’s persistent opposition to private cryptocurrencies

Despite legal setbacks, RBI Governor Shaktikanta Das has consistently characterized cryptocurrencies as posing “huge risks to financial stability” and called them a “clear danger” to the economic system.

Previous statements from Das suggested that all cryptocurrencies should be banned due to their potential to undermine India’s financial and macroeconomic stability.

The central bank has remained firm in its belief that crypto could undermine India’s financial stability. It has also cited concerns about its use in money laundering and its potential impact on monetary policy effectiveness.

In 2022, India announced a 30% tax on crypto gains and a 1% TDS on cryptocurrency transactions. This remains one of the world’s highest cryptocurrency tax regimes.