RBI Backs Crypto Containment as India Prepares Policy Report

The Indian central bank reportedly urged lawmakers to keep banks insulated from crypto and private stablecoins while preserving room for regulated tokenization.

The Reserve Bank of India (RBI) reportedly backed a containment strategy for digital assets to shield banks and other financial institutions from exposure to crypto and privately issued stablecoins, as lawmakers prepare a report on the country’s digital asset policy.

According to a report by The Economic Times, RBI Deputy Governor Rohit Jain and Executive Director P. Vasudevan presented the central bank’s position to the Parliamentary Standing Committee on Finance on Thursday.

In a background note submitted to the panel, the RBI reportedly said prohibition remained a recognized policy option and recommended preventing the use of crypto in payments and settlements while restricting banking-sector exposure.

The central bank reportedly warned that applying traditional regulation to crypto could legitimize speculative assets and create a false perception of safety among users. However, it urged policymakers to distinguish crypto from tokenized government securities, corporate bonds and other regulated financial instruments so that restrictions would not hinder tokenization.

Chainalysis’ 2025 Global Crypto Adoption Index. Source: Chainalysis

India ranked first in Chainalysis’ 2025 Global Crypto Adoption Index, although the RBI reportedly challenged the methodology behind private-sector adoption rankings.

The RBI’s latest reported proposal echoes an approach it took in 2018, when the central bank directed regulated financial institutions to stop dealing in crypto or providing services to individuals and businesses involved in them.

The approach effectively cut off crypto exchanges from India’s banking system without prohibiting individuals from owning or trading crypto.

India’s Supreme Court overturned the circular in March 2020, following a challenge brought by exchanges and the Internet Mobile Association of India. The court recognized the RBI's authority to take preventive action but found that the measure failed the test of proportionality, noting that the central bank had not shown harm suffered by entities it regulated.

Related: India arrests Darwin Labs co-founder in GainBitcoin scam probe

In May 2021, the RBI clarified that banks could no longer cite the invalidated circular when cautioning customers against crypto transactions. However, it said regulated institutions could continue applying know-your-customer, anti-money laundering and foreign-exchange compliance requirements.

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