India’s Central Bank Wants Crypto Gone — No Holdings, No Trading, No Exposure For Banks

The Reserve Bank of India (RBI) has reasserted its call for a total crypto prohibition in the country, pushing for policies that would bar banks and financial institutions from holding, trading, or gaining any exposure to digital assets. The call was first reported by Reuters on Wednesday, which reviewed internal government documents. 

Crypto Has Avoided A Ban In India For Years 

The documents, according to Reuters, reveal that key Indian agencies are leaning toward tighter restrictions on virtual digital assets, even though no formal policy banning or regulating them has ever been adopted. 

The RBI’s position is not new — the central bank has repeatedly warned about crypto-related risks — but the latest documents show a preference for hardening prohibition rather than softening it.

India’s relationship with crypto has been defined by indecision for nearly a decade. A court struck down RBI policies that effectively banned cryptocurrencies in 2018, which Reuters said pushed digital assets into a regulatory “grey zone.”

Moreover, a 2021 draft law that would have banned private cryptocurrencies like Zcash (ZEC) and Monero (XMR) was never introduced in Parliament. A discussion paper on the subject has been deferred repeatedly. 

But the RBI’s specific concerns extend beyond crypto broadly. The central bank has raised warnings about stablecoins. These assets, commonly backed by foreign currencies such as the US Dollar, pose a threat to India’s monetary sovereignty, the RBI argued. 

Allowing stablecoins, the bank says, also makes it harder to detect and tax cryptocurrency gains, since they reduce the need to convert holdings into rupees, where transactions are more visible.

A Government That Still Has No Answer 

Global crypto exchanges including Binance and Coinbase (COIN) can currently operate in India after registering with a government agency. Indian banks are not formally prohibited from dealing in crypto, though major lenders have steered clear following the RBI’s repeated warnings. 

The tax department noted that price volatility and the absence of consistent valuation standards make it difficult to assess crypto assets for tax purposes. According to the documents Reuters reviewed, the Ministry of Corporate Affairs is examining accounting standards and guidance for virtual digital assets.

Whether the RBI’s preference for prohibition translates into actual policy remains unclear. The government has shown no urgency to formalize a position — and has consistently prioritized not deciding over deciding. 

But the documents suggest that the agencies responsible for financial stability and tax collection are moving in a direction that the government has so far declined to follow.

At the time of writing, Bitcoin (BTC) had pulled back from Tuesday’s surge near $64,000, dropping 3% to $61,720 according to CoinGecko — giving back some of the ground it recovered after last week’s crash below $58,000, its lowest level since September 2024.

Featured image generated with OpenArt.