Sei (sei) 
India’s cryptocurrency landscape remains a contentious topic as the Reserve Bank of India (RBI) reiterates its firm opposition to digital assets. Citing potential risks to financial stability and monetary policy, RBI Governor Sanjay Malhotra emphasized the central bank’s concerns during a recent public statement. This ongoing tension reflects a broader regulatory deadlock in the country, where legal, judicial, and financial institutions are at odds over the future of cryptocurrencies.
RBI’s Concerns About Cryptocurrencies
Speaking at a press conference, Malhotra highlighted the RBI’s consistent stance on the issue. He stated, “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.”
These remarks come as a government-appointed committee continues to deliberate on cryptocurrency regulations. India is expected to publish a comprehensive policy discussion paper by June 2025, following increasing pressure from the Supreme Court to provide regulatory clarity. The RBI’s concerns are rooted in the potential for cryptocurrencies to destabilize the financial system and undermine the effectiveness of monetary policies. Additionally, the central bank has expressed apprehension about the use of cryptocurrencies in illegal activities, such as money laundering.
India’s Supreme Court Pressures for Regulation
India’s Supreme Court has actively called for clearer policies, questioning the government’s prolonged delay in establishing a regulatory framework for digital assets. In recent judicial proceedings, a bench led by Justices Surya Kant and N. Kotiswar Singh remarked that banning cryptocurrencies outright is not a viable solution, especially given the advancements in global financial systems.
The Supreme Court’s involvement is significant. In March 2020, the court overturned the RBI’s 2018 circular that prohibited banks and financial institutions from providing services to cryptocurrency businesses. The court ruled that the banking ban was disproportionate and violated constitutional rights under Article 19(1)(g), which guarantees the freedom to practice any profession or carry on any trade or business.
A Brief History of India’s Crypto Regulation
- In 2018, the RBI issued a circular banning banks from supporting cryptocurrency-related transactions.
- In March 2020, the Supreme Court overturned this ban, deeming it unconstitutional.
- Following the ruling, the RBI instructed banks not to block cryptocurrency transactions based on the invalidated circular.
While the court’s decision provided temporary relief to the crypto industry, the RBI has remained steadfast in opposing private cryptocurrencies, repeatedly citing risks to financial and macroeconomic stability.
RBI’s Persistent Opposition
RBI Governor Shaktikanta Das has consistently referred to cryptocurrencies as a “clear danger” to India’s economy. He has argued that digital assets pose “huge risks to financial stability” and should be banned entirely. According to the RBI, the unregulated nature of cryptocurrencies, coupled with their volatility, makes them unsuitable for integration into India’s financial ecosystem.
In 2022, the Indian government introduced a 30% tax on cryptocurrency gains and a 1% tax deducted at source (TDS) on all cryptocurrency transactions. This taxation framework is among the most stringent globally, making it challenging for crypto traders and investors to operate profitably.
Key Takeaways for Crypto Enthusiasts
- Regulatory Uncertainty: India’s regulatory framework for cryptocurrencies remains ambiguous, with no clear guidelines in place as of now.
- Tax Burden: The high tax rates on crypto gains and transactions may deter investors from entering the market.
- Judicial Oversight: The Supreme Court’s active involvement could push the government toward creating a more balanced regulatory approach.
As the debate over cryptocurrencies in India continues, investors and enthusiasts are advised to stay informed about policy developments and exercise caution when engaging in crypto-related activities. The future of digital assets in India hinges on the outcome of ongoing discussions between the government, judiciary, and financial institutions.
