India's Central Bank Renews Push for Crypto Ban: Report

The Reserve Bank of India (RBI) has reiterated its support for a crypto policy that leans toward prohibition, according to internal government documents reviewed by Reuters. The central bank continues to express concerns about financial stability, monetary sovereignty, and the role of privately issued stablecoins.

RBI recommends that banks and financial institutions be prohibited from holding, trading, or gaining any exposure to cryptocurrencies and privately issued stablecoins such as USDT and USDC. The bank views prohibition as a means to keep digital assets outside the regulated financial system and reduce potential risks.

Stablecoins are flagged as a specific concern. Foreign currency-pegged stablecoins could pose a risk to domestic monetary sovereignty, while rupee-backed stablecoins could affect the government’s income from issuing fiat currency and create problems during periods of financial stress.

India has not fully banned crypto trading, but the sector remains in a regulatory grey zone. Major lenders generally avoid direct crypto exposure after multiple warnings from the central bank, even though there is no direct prohibition on dealing in digital assets.

Separately, the country’s tax department warned that crypto transactions are becoming harder to track, especially when routed through offshore exchanges, peer-to-peer rupee trades, or private self-custody wallets. The department found that fewer than a quarter of 645,000 individuals who made crypto transactions in 2023 reported them on their tax returns. India currently taxes crypto gains at 30%, but overseas platforms, valuation gaps, and unclear ownership complicate compliance.

Source: https://cryptopotato.com/indias-central-bank-renews-push-for-crypto-ban-report/