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- RBI governor reiterates crypto remains a threat to India’s monetary policy and financial stability.
- Despite court pressure, India’s central bank sticks to its cautious stance on digital assets.
Reserve Bank of India (RBI) Governor Sanjay Malhotra has made it clear that their view on digital assets like Bitcoin and Ethereum remains the same: crypto is considered risky, according to Times of India.
According to him, these assets can destabilize the financial system and make it difficult to implement monetary policy in a country as large as India. It’s like saying, “We don’t want our financial system to suddenly turn into a digital playground without rules.”
Legal Clarity Demanded as Courts Push Back on Crypto Uncertainty
On the other hand, the Supreme Court of India has actually pushed back. In a hearing held in late May, the judges said that a total ban on crypto was not a realistic solution. They even likened the unsupervised trading of digital assets to the practice of “modern hawala” – a term often associated with illegal cross-border money transfers.
The court urged the government to move quickly by creating a clearer legal framework that can be adhered to by all parties. And frankly, many market players in India are also starting to get tired of the uncertainty.
Furthermore, the government is reportedly preparing a discussion paper that is scheduled to be published this June. The contents will include various policy options on crypto, and will be opened for public input.
This step may seem slow, but the goal is clear: so that the policies that come out later are not reckless and can be implemented without drama. This is also in line with recommendations from the IMF and FSB, which previously provided input to the Indian government.
Strict Rules in India Spark Exodus Toward More Open Markets
Meanwhile, pressure from the tax and compliance side is also increasingly being felt. CNF previously reported that in February, the Indian government imposed a new regulation that imposes a fine of up to 70% for unreported crypto profits. Worse, this regulation is backdated to 48 months. Imagine if someone only found out today that a transaction they made four years ago could be subject to such a large fine.
It is no wonder that many Indian investors are starting to look for other ways—Singapore, Hong Kong, and South Korea are starting to be eyed as safe havens.
In the field, crypto exchanges are also rushing to meet the deadline from the FIU-IND (Financial Intelligence Unit India). Since April, all platforms have been asked to re-verify user identities, aka KYC, before June 30, 2025. All accounts that have not been updated in the last 18 months must be rechecked.
Not only that, accounts that are considered risky must also be investigated further. The government wants to ensure that taxes are collected properly, including compliance with the 1% TDS deduction per transaction.
However, the RBI has yet to show any signs of opening the door to crypto adoption in India’s traditional financial system. There has been no relaxation, nor any positive signals. Although Indian banks have been freed from the ban on crypto transactions since 2020, the RBI has continued to issue warnings. They seem to be saying, “Go ahead if you want to play crypto, but don’t expect us to follow suit.”
