India's RBI Sticks to a "Restrict, with a Tilt Toward Ban" Line on Crypto

July 3 (BlockBeats) — The Reserve Bank of India (RBI) told Parliament's Standing Committee on Finance that it continues to favor a regulatory posture toward crypto assets that is "restrictive and leans toward prohibition," adding that an outright ban remains a policy option recognized within international regulatory frameworks. In its submission, the RBI urged that banks and other regulated financial institutions should not hold, trade, or otherwise take exposure to crypto assets or privately issued stablecoins, arguing this would help shield the financial system from potential contagion risks. The central bank also cautioned that applying traditional financial-sector rules to crypto could mislead markets by conferring legitimacy on speculative instruments it says lack real economic value, while giving users a false sense of safety. On stablecoins, the RBI warned that large-scale adoption could erode India's monetary sovereignty, weaken monetary-policy transmission, fragment the payments landscape, and threaten financial stability. It recommended prioritizing sovereign digital payment infrastructure, including central bank digital currencies (CBDCs). Separately, the RBI challenged claims that India leads the world in crypto adoption, citing methodological issues in datasets produced by private blockchain analytics firms. The RBI noted that 54 cryptocurrency service providers are currently registered with India's FIU. It estimated roughly 39.3 million KYC-verified users hold crypto assets worth about INR 20.437 billion. The submission also stressed the need to clearly distinguish speculative crypto assets from tokenized real-world assets (RWA) such as government and corporate bonds, warning that failing to do so could hamper innovation in the tokenization of financial assets.