The Reserve Bank of India has once again defended a stricter policy for the crypto market and reaffirmed its preference for measures that move toward a ban on these assets within the regulated financial system. Internal government documents reveal that the monetary authority continues to consider cryptocurrencies a potential risk to economic stability and to the control of the country’s monetary policy.
According to the records, the institution maintains the position that banks and other financial institutions should not hold, trade, or possess any type of exposure to cryptocurrencies or stablecoins issued by private companies, such as USDT and USDC. The aim would be to prevent these digital assets from becoming part of traditional financial infrastructure.
Among the Reserve Bank of India’s biggest concerns are stablecoins. In the monetary authority’s assessment, digital currencies tied to foreign currencies can reduce the country’s control over its monetary policy. Meanwhile, stablecoins backed by the rupee could affect revenue obtained from the issuance of the national currency and increase risks to financial stability during periods of greater economic tension.
Despite the regulator’s tough stance, crypto trading is still allowed in India. The market, however, remains without a definitive regulatory framework, which keeps companies and investors in an environment of uncertainty. As a result, local banks continue to avoid offering services directly related to cryptocurrencies after various alerts issued by the central bank over the past few years.
In addition to regulatory concerns, the Indian government also faces difficulties in supervising operations involving digital assets. The Tax Department stated that transactions carried out through brokers based abroad, peer-to-peer negotiations using rupees, and movements made by self-custody wallets make tracking significantly more complex.
Data from the authorities show that less than 25% of the roughly 645 thousand taxpayers who carried out cryptocurrency operations in 2023 correctly declared these transactions on their income tax.
Although profits earned with cryptocurrencies are subject to a 30% tax rate in India, tax authorities say that international platforms, differences in the valuation of the assets, and difficulties in identifying their true owners continue to be important obstacles to ensuring compliance with the country’s tax rules.