Key facts
- The Reserve Bank of India (RBI) is pushing for a policy that leans toward prohibiting cryptocurrencies.
- Concerns include tax evasion, financial contagion, and potential capital outflows.
- Approximately 39 million Indian investors hold about $2.1 billion in digital assets.
- The RBI has previously restricted banks from crypto business and warns of stablecoin threats.
- Despite past attempts, India lacks a dedicated cryptocurrency law, with trading currently legal.
The Reserve Bank of India (RBI) is intensifying its push for a cryptocurrency ban, citing concerns over tax evasion, financial contagion, and potential capital outflows. Internal government documents reveal the RBI advocates for a policy that "leans toward prohibition," despite nearly 39 million Indian investors holding approximately $2.1 billion in digital assets. The central bank also expressed concerns regarding foreign-backed and rupee-pegged stablecoins, warning of threats to monetary sovereignty and potential loss of seigniorage. Deputy Governor Rohit Jain has called for insulating banks from crypto exposure. India's crypto market operates in a regulatory grey zone since the Supreme Court overturned a 2018 RBI banking ban, with a 2021 draft bill to ban private cryptocurrencies never being tabled. Indian crypto users face a flat 30% tax and a 1% TDS on trades, with no loss offset, pushing many towards offshore platforms which are difficult to track and tax. Despite these efforts, India ranks high in global crypto adoption.