Despite increasing calls for clear cryptocurrency regulations in India, the Reserve Bank of India (RBI) has doubled down on its long-standing opposition to digital assets. RBI Governor Sanjay Malhotra reiterated the central bank’s firm stance during a press conference, citing risks to monetary policy and financial stability as the primary reasons behind its anti-crypto position.
“RBI has maintained a consistent stance on this issue,” said Malhotra. “A government committee is currently examining the matter. We remain concerned about the potential risks crypto poses to financial stability and monetary policy.” His remarks come as a government-appointed committee continues to review possible policy frameworks, and as India’s Supreme Court presses for regulatory clarity.
The tension underscores India’s ongoing regulatory deadlock, where legal, judicial, and financial authorities remain divided over the future of digital assets. The Supreme Court has urged the government to take decisive action, stating that merely banning cryptocurrencies is no longer a feasible option in light of global financial advancements.
Supreme Court Demands Action
In recent hearings, a bench led by Justices Surya Kant and N Kotiswar Singh questioned the prolonged delay in developing a cohesive cryptocurrency framework. The absence of regulation, they noted, has led to market confusion and hinders innovation in the country’s burgeoning Web3 and fintech ecosystems.
India’s complicated relationship with crypto dates back to 2018, when the RBI issued a circular prohibiting banks from servicing cryptocurrency businesses. That ban was overturned by the Supreme Court in March 2020, which ruled that the restrictions were disproportionate and violated the constitutional right to practice any profession (Article 19(1)(g)).
Following the decision, the RBI was forced to instruct banks not to cite the overturned circular as justification for halting crypto-related services. Despite this legal win for the crypto sector, the RBI’s underlying resistance has remained unchanged.
RBI’s Persistent Opposition
RBI Governor Shaktikanta Das, Malhotra’s predecessor, had previously described cryptocurrencies as a “clear danger” to the economy. Das has often warned of crypto’s potential role in facilitating money laundering and its threat to India’s macroeconomic stability. The RBI believes that decentralized digital currencies could weaken the effectiveness of monetary policy, especially as India pushes forward with its own Central Bank Digital Currency (CBDC) initiatives.
In 2022, the Indian government imposed a 30% tax on crypto gains and a 1% tax deducted at source (TDS) on all crypto transactions—one of the most stringent crypto tax regimes globally. These measures, although not outright bans, have significantly discouraged retail participation and trading volume across Indian exchanges.
What Lies Ahead?
India is expected to release a comprehensive policy discussion paper in June 2025, as confirmed by officials close to the committee reviewing crypto regulations. Industry stakeholders and investors alike are closely watching this development, hoping for a more balanced approach that allows innovation while addressing concerns around fraud, money laundering, and investor protection.
Until then, the regulatory uncertainty persists, creating a challenging environment for India’s crypto startups and global firms eyeing entry into the market.
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