India’s central bank has renewed its cautious position on cryptocurrencies while continuing to support tokenization, distributed ledgers and central bank digital currency projects.
Summary
- RBI Governor Sanjay Malhotra said India remains cautious on crypto while supporting tokenization and DLT.
- Malhotra cited monetary sovereignty, monetary policy, capital flows and singleness of money as key concerns.
- RBI is testing tokenized corporate bonds, certificates of deposit and programmable digital rupee settlement systems.
- India’s FIU issued notices to 15 crypto platforms in September for violating anti-money-laundering compliance requirements.
- India has not enacted a comprehensive crypto law while tax and AML rules remain active.
RBI Governor Sanjay Malhotra said at the Kautilya Economic Conclave in New Delhi on Oct. 3 that India remained cautious toward crypto because of risks involving monetary sovereignty, monetary policy and capital flows.
“So, our approach has been to promote the underlying technologies,” Malhotra said, referring to distributed ledger technology and tokenization. He added that the central bank was using some of the technology internally and through public-private partnerships, while its approach to crypto remained “cautious.”
RBI sees risks in private crypto money
Malhotra identified the “singleness of money” as one concern surrounding private digital assets. The principle refers to different forms of money denominated in the same currency maintaining the same value and remaining interchangeable.
Crypto assets and privately issued currencies could create problems for that system if their value, backing or settlement structure differs from sovereign money, according to the governor. Malhotra tied the concern to monetary policy and capital-flow management, particularly in emerging economies where authorities maintain controls on cross-border capital movements.
During his prepared address, the RBI governor said financial innovation should preserve settlement finality, financial integrity and the “singleness of money.” The speech specifically listed tokenization and artificial intelligence among technologies that can improve financial efficiency when used within those safeguards.
Malhotra questioned the argument that private cryptocurrencies are needed to improve domestic payments. India already has fast and low-cost domestic payment infrastructure, he said, leaving cross-border payments as the more difficult problem.
Central bank digital currencies and links between regulated payment systems could provide another route for international transfers, according to Malhotra. His comments follow the RBI’s reported push to keep banks away from private crypto and stablecoins while allowing regulated tokenized financial assets to develop separately.
Internal government documents reported in July indicated that the central bank continued to favor a policy direction “leaning toward prohibition.” RBI officials had reportedly recommended insulating regulated banks and financial institutions from holdings, trading and other exposure to cryptocurrencies and privately issued stablecoins.
No comprehensive prohibition has been enacted as of Oct. 4. Crypto trading continues in India under existing tax, anti-money-laundering and reporting rules, while the government has not introduced a dedicated law covering the entire digital asset market.
RBI is moving ahead with regulated tokenization
The central bank’s position toward tokenization has moved in a different direction from its treatment of private cryptocurrencies.
At the Global Fintech Festival in September, Malhotra outlined RBI projects involving programmable CBDCs, tokenized certificates of deposit and corporate bonds settled through the wholesale digital rupee.
RBI said tokenized certificates of deposit issued through its Unified Markets Interface were being used to study how financial markets could operate with digital settlement infrastructure. The central bank and Securities and Exchange Board of India then moved into corporate bonds, connecting tokenized securities with wholesale CBDC settlement.
SEBI announced the successful launch of its Demat 2.0 pilot for tokenized corporate bonds on Sept. 10. The pilot uses distributed ledger infrastructure for securities records while settling the cash side of transactions through central bank money.
In related coverage, India’s first digital-rupee-settled tokenized bond transactions involved ₹1,025 crore across three issuances. REC raised ₹500 crore, Larsen & Toubro issued another ₹500 crore, and IIFL completed a ₹25 crore transaction.
The bonds remain conventional regulated securities with normal contractual rights, interest terms and repayment obligations. Tokenization changes how ownership and settlement are recorded; it does not turn the instruments into cryptocurrencies.
Digital rupee use is expanding beyond bond settlement
The RBI has continued building its digital rupee program while raising concerns about privately issued currencies.
In August, the Indian government announced a CBDC-based direct benefit transfer program for Chandigarh and Dadra and Nagar Haveli under the Pradhan Mantri Garib Kalyan Anna Yojana. The program was scheduled to begin Aug. 14 using the digital rupee for government benefits.
Malhotra said in September that programmable CBDC pilots were exploring targeted government transfers and other use cases. The RBI’s retail digital rupee retains the legal status of sovereign currency and can be converted into bank deposits, according to central bank material.
Cross-border settlement has emerged as another area under examination. In September, India and Russia began discussing CBDC-based trade settlement infrastructure as their central banks explored links between sovereign digital currencies.
India’s existing payment infrastructure has expanded overseas as well. Government data published in July showed UPI operating across multiple foreign markets, including Singapore, France, the UAE, Nepal and Mauritius, with newer payment links added in 2026.
India keeps tightening crypto compliance
India’s cautious policy has not stopped authorities from regulating crypto businesses through anti-money-laundering law.
Virtual digital asset service providers have been covered by the Prevention of Money Laundering Act since March 2023. Platforms serving Indian customers must register with the Financial Intelligence Unit-India as reporting entities, even when the company has no physical office in the country.
The framework requires reporting, record keeping and other AML obligations. Government notices continue to warn that crypto assets and NFTs remain unregulated as investment products and may offer no regulatory remedy for losses.
Tax law continues to recognize virtual digital assets. India’s Income Tax Act, 2025, which took effect April 1, 2026, explicitly defines VDAs including cryptocurrencies and tokenized assets.
Compliance enforcement intensified again in September. FIU-IND issued notices to 15 virtual asset providers, including Weex, Blofin, DigiFinex, WOO X, WhiteBIT and ChangeNow, for operating without meeting registration requirements.
The latest enforcement action against 15 offshore crypto platforms included requests to take down applications and URLs accessible to Indian users. FIU-IND said its obligations apply according to the services offered in India and do not depend on whether a provider maintains a local physical presence.
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