What to know:
- RBI urged lawmakers to restrict banks from dealing with cryptocurrencies and privately issued stablecoins in India’s upcoming digital asset policy.
- The central bank warned against using crypto for payments and settlements and against treating digital assets like regulated financial products.
- Despite RBI’s concerns, India remains the world’s top-ranked country in the 2025 crypto adoption index by Chainalysis.
Reserve Bank of India (RBI) has reportedly urged policymakers to ensure that the use of cryptocurrencies and privately owned stablecoins is not allowed in the Indian banking sector.
As reported by The Economic Times, the Deputy Governor of the Reserve Bank of India, Mr. Rohit Jain, and Executive Director, Mr. P. Vasudevan, made the representations of the central bank before the Parliamentary Standing Committee on Finance. These representations have come as parliamentarians draft a report that might influence the future crypto policy in India. RBI Wants to Limit Crypto’s Role in the Financial System
The RBI mentioned in a background note to the committee that a ban on cryptocurrencies continues to be a relevant policy choice. It also advised against the use of digital assets for making payments and settlements and reducing bank exposure to cryptocurrencies and private stablecoins.
The central bank stressed that imposing conventional financial standards on cryptos could create a feeling of endorsement or security for investors to jump into the high-risk investments.
The RBI emphasized that cryptocurrencies should not be considered as tokenized financial products. They advised the policymakers to keep a clear distinction between crypto assets and tokenized government securities and corporate bonds, as tokenization would face problems due to crypto regulations.
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India Remains a Global Leader in Crypto Adoption
In spite of the warnings from the RBI, India still ranks high among other countries in terms of cryptocurrency market share. According to the Global Crypto Adoption Index published by Chainalysis in 2025, India is ranked highest on the list, although the RBI raised concerns about the methodology used.
RBI Revisits Its Earlier Banking Restrictions
RBI’s recent stance appears to be similar to its stance from 2018, when it mandated that banks regulated by it not provide any services to cryptocurrency entities and those who deal with cryptocurrency operations.
While the ruling did not forbid individuals from holding or trading in cryptocurrencies, the ruling had, in effect, cut off cryptocurrency exchanges from the banking sector, rendering their operations extremely difficult.
However, in March 2020, the Supreme Court of India quashed the RBI ban imposed on crypto exchanges, following a case filed by internet-based associations. The decision of the court was based on its agreement that the Reserve Bank of India had the power to impose the regulation, but it was an unnecessary measure.
The Reserve Bank of India in May 2021 stated that banks cannot use the cancelled 2018 circular to caution their customers regarding their cryptocurrency dealings. It is still incumbent upon banks to comply with KYC, AML, and forex regulations.
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