TL;DR:
The Reserve Bank of India (RBI) once again pressed Parliament to isolate the banking system from cryptocurrencies and privately issued stablecoins. As reported by The Economic Times, Deputy Governor Rohit Jain and Executive Director P. Vasudevan presented the central bank’s official position before the Parliamentary Finance Committee last Thursday.
In a background document submitted to the panel, the RBI indicated that a ban remains a valid public policy option. The institution recommended preventing the use of cryptocurrencies in payments and settlements and restricting the banking sector’s exposure to these assets. It also warned that applying traditional regulatory frameworks to crypto assets could legitimize speculative assets and create a false sense of security among users.
However, the central bank drew a distinction between cryptocurrencies and regulated tokenized financial instruments, such as government securities and corporate bonds. According to the report, the RBI urged lawmakers to avoid hindering the development of tokenization with restrictions designed for speculative crypto.
The position is not new. In 2018, the Reserve Bank had already ordered regulated financial institutions to cease all operations involving cryptocurrencies or the provision of services to individuals and companies linked to them. That measure effectively cut off crypto exchanges from the Indian banking system without banning individual ownership or trading of these assets.
The Supreme Court of India overturned that circular in March 2020, following a lawsuit filed by exchanges and the Internet and Mobile Association of India. The court acknowledged the RBI’s authority to take preventive measures but determined that the restriction did not pass the proportionality test, since the central bank failed to demonstrate concrete harm to regulated entities.
In May 2021, the RBI clarified that banks could no longer invoke that invalidated circular to discourage their customers from operating with cryptocurrencies. Even so, it kept in place compliance obligations related to know-your-customer, anti-money laundering, and foreign exchange regulations.
India, meanwhile, tops Chainalysis’ 2025 Global Crypto Adoption Index, although the Reserve Bank of India questioned the methodology used by the private firm to compile that ranking.
