India has 39 million crypto investors. Its central bank wants none of them to access the ecosystem through a bank.
The Reserve Bank of India has sent the government formal recommendations to bar banks and financial institutions from holding, trading, or offering any exposure to crypto assets — including privately issued stablecoins pegged to foreign currencies or the Indian rupee. Reuters reported the move citing internal government documents reviewed this week.
The RBI's core case rests on tax compliance data. Of 645,000 individuals who conducted crypto transactions in fiscal year 2023, fewer than 25% disclosed those gains on tax returns. Offshore exchanges, anonymous wallets, and peer-to-peer trading make tracking nearly impossible, the central bank argues.
Financial stability concerns run alongside the tax argument. Dollar-backed stablecoins, in the RBI's view, undermine India's monetary sovereignty. Rupee-pegged tokens risk eroding seigniorage — the revenue the state collects from issuing fiat currency. During market stress, the bank warns, any of this could bleed into the broader financial system.
The background matters here. The RBI tried this before: in 2018, it banned banks from dealing with crypto. The Supreme Court struck the ban down in 2020. Since then, India has operated in a grey zone — 30% tax on crypto profits, a 1% transaction levy, but no dedicated law. Now the central bank is pushing again.
The finance ministry has historically taken a softer line, so whether these recommendations become law remains uncertain. But the signal is clear: the world's most populous crypto user base is watching a regulator that still views the whole industry as a problem to contain rather than an opportunity to shape.
