India’s central bank has reportedly renewed its push to keep cryptocurrencies away from the country’s banking system, recommending a policy that limits exposure to digital assets and privately issued stablecoins. The recommendation comes alongside new concerns from tax authorities, who say crypto activity remains difficult to monitor through offshore platforms and private wallets.
According to internal government documents reviewed by Reuters, the Reserve Bank of India (RBI) wants banks and other financial institutions barred from holding, trading, or gaining exposure to cryptocurrencies. The central bank also continues to support a policy leaning toward prohibition, arguing that keeping crypto outside the regulated financial system would reduce financial risks.
⚠️ 🇮🇳 India central bank backs crypto ban, tax department warns of evasion risks, documents show
India’s central bank is renewing its push for a crypto ban, citing financial stability risks, while the tax department highlights major hurdles in tracking offshore trading and tax… pic.twitter.com/UAjQGU3uxK
— BITCOIN EXPERT INDIA (@Btcexpertindia) July 8, 2026
Tax officials warn crypto reporting remains weak
The documents also show India’s tax department has identified gaps in crypto tax reporting. Officials found that fewer than 1 in 4 individuals who traded cryptocurrencies during the 2022–23 financial year reported those transactions on their tax filings.
Authorities said trades carried out through overseas exchanges, peer-to-peer markets, and private wallets make it harder to identify users, verify taxable income, and recover unpaid taxes. The department also raised concerns about inconsistent valuation standards, saying they complicate tax assessments for digital assets.
The RBI repeated its concerns about stablecoins as well. It argued that foreign currency-backed stablecoins could weaken monetary sovereignty. At the same time, rupee-backed versions may reduce government revenue from currency issuance and create additional financial risks during periods of market stress.
How does India’s approach compare with other major markets?
India’s position now stands apart from several countries that have chosen regulation instead of tighter restrictions. The European Union has begun implementing its Markets in Crypto-Assets (MiCA) framework, giving licensed crypto firms access across member states. Japan continues to require exchanges to register with the Financial Services Agency, while Singapore allows licensed firms to operate under its Payment Services Act.
India, however, remains in an unusual position. Crypto trading is taxed, registered exchanges can legally operate, and millions of people continue to hold digital assets, yet the country still has no dedicated crypto law. The latest recommendations suggest policymakers remain more focused on limiting financial system exposure than creating a licensing framework similar to those adopted elsewhere.
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