The Reserve Bank of India (RBI) is expected to maintain its cautious stance on private cryptocurrencies, despite an impending leadership change, according to two senior officials. Speaking on condition of anonymity, the officials affirmed that cryptocurrencies remain unregulated in India and are not recognised as legal tender.
While the Indian government is yet to introduce specific legislation for crypto assets, it is reportedly working on a discussion paper to explore regulatory options. These options range from establishing a regulatory framework to imposing a complete ban on cryptocurrencies, the officials said.
Central Bank Digital Currency Strengthens RBI’s Position
The RBI’s recently introduced digital currency, the e₹ (digital rupee), has bolstered the central bank’s argument against private cryptocurrencies. “With RBI’s digital currency (e₹) in circulation, the argument that the technology behind cryptocurrencies must not be outrightly discarded is no longer valid,” one official stated.
The official further highlighted the significance of the G20 synthesis paper prepared by the International Monetary Fund (IMF) and the Financial Stability Board (FSB). This document serves as a global benchmark for cryptocurrency regulation, proposing a minimum threshold for regulatory measures while allowing individual countries to impose stricter controls, including outright bans.
India’s Regulatory Landscape Remains in Limbo
India’s approach to cryptocurrencies remains in a state of flux. While there is no specific law governing crypto assets, the RBI has consistently voiced concerns about their potential risks to financial stability. The central bank has previously advocated for a complete ban, citing issues such as the speculative nature of cryptocurrencies and their potential use in illicit activities.
In contrast, some industry stakeholders and investors argue that a regulatory framework would strike a balance, allowing the benefits of blockchain technology to coexist with safeguards against misuse.
As the government deliberates on the upcoming discussion paper, the global momentum toward crypto regulation, spurred by the G20 recommendations, could play a key role in shaping India’s policies.
Global Trends Influence India’s Crypto Outlook
The G20 synthesis paper represents the latest effort to create a coordinated international approach to cryptocurrency regulation. While it provides flexibility for individual nations to impose stricter measures, it also emphasises the importance of establishing minimum regulatory standards to mitigate risks associated with digital assets.
India’s stance will likely reflect its broader priorities of safeguarding financial stability while leveraging digital innovation. However, with the e₹ already in circulation, the RBI may remain steadfast in its opposition to private cryptocurrencies, viewing them as unnecessary in a financial system equipped with a state-backed digital currency.
As discussions continue, the trajectory of India’s crypto policy will be closely watched, both domestically and internationally, as governments and regulators navigate the complexities of this evolving sector.