The Reserve Bank of India (RBI) has reiterated its support for a crypto policy “leaning towards prohibition” due to concerns about financial stability and monetary sovereignty, particularly regarding privately issued stablecoins. Simultaneously, India’s tax department has warned that offshore exchanges, peer-to-peer trades, and private wallets are making enforcement significantly harder. This dual regulatory pressure highlights the ongoing tension between the central bank’s desire to ban crypto and the practical difficulties of tracking digital asset transactions, even as the sector remains in a regulatory grey zone.
India’s central bank has again backed a tougher stance on crypto, while tax officials warned that offshore trading and private wallets are making enforcement harder. The Reserve Bank of India (RBI) has reiterated its support for a crypto policy “leaning towards prohibition,” according to internal government documents.
The documents show that the institution continues to be concerned about financial stability, monetary sovereignty, and the role of privately issued stablecoins. According to the report, the RBI stated that banks and financial institutions should be prohibited from holding, trading, or gaining any exposure to cryptocurrencies and privately issued stablecoins like USDT and USDC.
The bank considers a prohibition a means of keeping digital assets outside the regulated financial system to reduce risks. The RBI also flags stablecoins as a specific concern, arguing that foreign currency-pegged coins could pose a risk to domestic monetary sovereignty.
India has not fully banned crypto trading, but the sector remains in a regulatory grey zone. Major lenders generally avoid direct crypto exposure after receiving multiple warnings from the central bank.
The country’s tax department warned that crypto transactions are becoming harder to track when routed through offshore exchanges, peer-to-peer rupee trades, or private self-custody wallets. The department found that fewer than a quarter of 645,000 individuals who made any crypto transactions in 2023 reported them on their tax returns.
India currently taxes crypto gains at 30%. However, officials stated that overseas platforms, valuation gaps, and unclear ownership tend to complicate compliance.
