RBI Reiterates Cryptocurrency Ban Stance as India Reviews Virtual Asset Policy

India's cryptocurrency policy remains under discussion as key government agencies continue to assess the risks and benefits of virtual digital assets, according to a Reuters report. New government documents reviewed by Reuters indicate that the Reserve Bank of India (RBI) has reiterated its preference for a policy framework that leans towards prohibition.

The documents also highlight concerns from the tax department regarding the difficulty of monitoring cryptocurrency transactions conducted through offshore exchanges. The developments come as India continues to operate without a formal law either banning or comprehensively regulating cryptocurrencies.

RBI Cryptocurrency Policy Continues to Favour Stricter Controls

The RBI has once again expressed support for a cryptocurrency policy that leans towards prohibition, according to the documents. This position reflects the central bank's long-standing concerns regarding monetary sovereignty, financial stability and consumer protection.

While India has not introduced a blanket ban on cryptocurrencies, the RBI has consistently cautioned against the potential risks associated with virtual digital assets. The latest stance suggests that regulatory authorities remain focused on limiting systemic risks arising from the growing use of crypto assets.

India Crypto Regulation Remains Unresolved

India has operated in a policy grey area since a court ruling in 2018 struck down restrictions that had limited banking access for cryptocurrency businesses. A draft legislation proposed in 2021 to prohibit private cryptocurrencies was never introduced in Parliament.

Since then, discussions on a comprehensive policy framework have been delayed multiple times as policymakers weigh innovation against financial and regulatory concerns. The government has maintained that any future framework must balance technological advancement with risk management and safeguards for investors.

Tax Department Raises Concerns Over Offshore Crypto Trading

The documents reviewed by Reuters indicate that India's tax authorities remain concerned about cryptocurrency trading through overseas platforms. According to the tax department, transactions conducted via offshore exchanges can be difficult to track and monitor effectively.

This creates challenges for tax compliance, regulatory oversight and enforcement efforts. The concerns have gained significance as crypto investors increasingly access global trading platforms that may fall outside India's direct regulatory jurisdiction.

India’s Crypto Market Growth and Global Policy Trends

Despite ongoing policy uncertainty, cryptocurrency participation in India has continued to expand. Estimates from the tax department suggest that nearly 39 million Indian crypto traders held digital assets worth approximately $2.1 billion at the end of May 2026.

Globally, approaches to cryptocurrency regulation remain varied, with countries such as Japan and Singapore implementing regulatory frameworks while China maintains restrictions on crypto usage. Recent policy developments in the United States, including legislation supporting broader stablecoin adoption, have also contributed to increased global attention on digital assets.

Read More: RBI proposes tighter oversight of AI and algorithms in financial firms.

Conclusion

The latest government documents indicate that the RBI continues to support a cautious approach towards cryptocurrencies, with a policy preference leaning towards prohibition. At the same time, tax authorities have highlighted challenges in tracking offshore crypto transactions and ensuring compliance.

India has yet to finalise a comprehensive framework governing virtual digital assets, despite several years of policy discussions. As cryptocurrency adoption continues to grow domestically and internationally, the debate around regulation, innovation and financial stability remains a key area of focus for policymakers.

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