India's RBI Sticks to a "Restrict, With a Bias Toward a Ban" Line on Crypto

India's central bank has reiterated that it favors a regulatory stance on crypto assets that is restrictive and leans toward prohibition. In a July 3 submission to Parliament's Standing Committee on Finance, the Reserve Bank of India (RBI) said a ban remains a policy option recognized internationally within regulatory frameworks. It urged banks and other regulated financial institutions to avoid holding, trading, or taking exposure to crypto assets or privately issued stablecoins, warning that such links could transmit contagion risks into the financial system. The RBI argued that extending traditional financial regulation to crypto could mislead markets by lending legitimacy to speculative instruments it says lack real economic value, while giving users a false sense of safety. It also cautioned that broad stablecoin adoption could erode India's monetary sovereignty, weaken monetary-policy transmission, fragment the payments landscape, and threaten financial stability. The RBI recommended prioritizing sovereign digital payment infrastructure, including central bank digital currencies (CBDCs). The central bank also challenged claims that India leads the world in crypto adoption, pointing to methodological issues in estimates produced by private blockchain analytics firms. It noted that 54 crypto service providers are registered with India's Financial Intelligence Unit (FIU), and that roughly 39.3 million KYC-verified users hold crypto assets valued at about INR 20.437 billion. Finally, the RBI said speculative crypto assets should be clearly distinguished from tokenized real-world assets (RWAs) such as government and corporate bonds, so that rules aimed at crypto speculation do not hinder innovation in financial-asset tokenization.