Catenaa, Friday, July 17, 2026-India’s policy debate over cryptocurrencies is moving in a markedly different direction from other major financial centers.
A news report published by Reuters said that with newly disclosed government documents showing the Reserve Bank of India (RBI) continues to advocate a policy “leaning towards prohibition” while tax authorities warn that offshore trading platforms are undermining tax compliance.
The documents, reviewed by Reuters, indicate that India’s central bank wants banks and other regulated financial institutions barred from holding, trading or gaining exposure to cryptocurrencies and privately issued stablecoins, citing risks to financial stability, monetary sovereignty and financial contagion.
The position contrasts sharply with recent developments in Japan, Europe and the United States, where policymakers are increasingly focusing on regulating digital assets rather than excluding them from the financial system.
India has maintained an uncertain regulatory environment since the Supreme Court overturned an earlier banking restriction on cryptocurrencies in 2020. While digital assets remain legal to own and trade, the country has yet to introduce a comprehensive regulatory framework despite several years of policy discussions.
The latest documents suggest that key institutions are becoming more concerned about systemic risks as cryptocurrency adoption continues to grow.
According to the reported estimates, nearly 39 million Indians held approximately $2.1 billion worth of digital assets at the end of May, making India one of the world’s largest retail cryptocurrency markets despite the absence of dedicated legislation.
Rather than introducing a licensing framework, however, the RBI appears to favor limiting crypto’s integration with the regulated banking sector.
Official policy information from the Reserve Bank of India is available here, while broader fiscal policy is administered by India’s Ministry of Finance here.
India’s evolving position stands in contrast to developments across several major jurisdictions that are building regulatory frameworks around digital assets.
Catenaa recently reported how Japan’s stablecoin economy is rapidly expanding, with SBI Group launching new blockchain financial services while retailers begin testing regulated digital currency payments. That approach treats stablecoins as components of future financial infrastructure rather than risks to be isolated.
Similarly, Catenaa earlier examined how the European Commission is preparing revisions to MiCA to accommodate tokenization and next-generation digital assets, signaling Europe’s intention to refine rather than reverse its regulatory framework.
In the United States, lawmakers continue negotiating the CLARITY Act, legislation designed to establish a comprehensive federal market structure for digital assets instead of relying primarily on regulatory enforcement.
Taken together, those initiatives suggest many leading economies are debating how to regulate digital assets rather than whether they should exist within regulated financial markets.
India’s tax authorities are also raising concerns over enforcement.
According to the documents, fewer than one-quarter of approximately 645,000 individuals who conducted cryptocurrency transactions during the financial year ending March 2023 disclosed those activities on their income tax returns.
Officials reportedly identified offshore exchanges, private wallets and peer-to-peer transactions as making it more difficult to identify beneficial owners and assess taxable gains.
India currently taxes cryptocurrency profits at 30%, one of the world’s highest tax rates on digital asset gains.
Information on tax compliance is available through the Income Tax Department of India here.
The documents also reveal that India’s institutions have not reached a unified position.
Previous discussions reportedly indicated that the Finance Ministry favored limited regulatory clarity supported by existing tax laws, while the RBI has consistently argued for keeping cryptocurrencies outside the regulated financial system.
That distinction is important.
The documents do not represent a government decision to prohibit cryptocurrencies. Instead, they illustrate continuing policy differences among India’s principal financial authorities as lawmakers consider how to balance innovation, consumer protection and monetary stability.
India’s policy choices extend well beyond its domestic market. As one of the world’s largest crypto investor populations, its regulatory direction could influence how other emerging economies approach digital assets. While Japan, Europe and the United States are refining frameworks for blockchain finance, India’s latest internal discussions suggest it remains focused on limiting the integration of cryptocurrencies into the traditional financial system. The outcome could shape investment, innovation and institutional adoption across the broader Asian market.
India has debated cryptocurrency regulation for several years without introducing comprehensive legislation. A proposed ban on private cryptocurrencies was never presented to Parliament, while successive governments have delayed publication of a formal policy paper. Although cryptocurrencies remain legal to own and trade, investors face a 30% tax on gains and a 1% tax deducted at source on many transactions. The Reserve Bank of India has repeatedly warned that cryptocurrencies and privately issued stablecoins could threaten monetary sovereignty and financial stability, while industry participants continue advocating for a regulated framework similar to those emerging in Japan, Europe and the United States.
