India’s central bank has reportedly renewed its push to keep cryptocurrencies away from the country’s banking system, recommending a strategy that limits exposure to digital assets and privately issued stablecoins.
According to The Economic Times, the Reserve Bank of India (RBI) presented its position to the Parliamentary Standing Committee on Finance on Thursday as lawmakers continue reviewing India’s digital asset policy.
RBI says “Not having a policy is a policy” on Crypto!
The Reserve Bank of India told a Parliamentary panel that it is not in favour of treating Virtual Digital Assets (crypto) as currency. RBI remains strongly opposed due to risks of money laundering and illegal activities.… pic.twitter.com/NOB08AUMaM— Dr. Rakesh Bansal (@iamrakeshbansal) July 3, 2026
The report said RBI Deputy Governor Rohit Jain and Executive Director P. Vasudevan told the committee that preventing crypto from entering the banking system would help reduce risks to financial institutions.
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Why does the RBI want banks to avoid crypto?
In a background note submitted to the committee, the RBI reportedly said banning certain crypto activities remains a valid policy option. It recommended preventing cryptocurrencies from being used for payments and settlements while limiting banks and other regulated financial institutions from dealing with crypto and privately issued stablecoins.
The central bank also warned that regulating crypto under the same framework as traditional financial products could give investors a false sense of security. According to the report, the RBI argued that such regulation may make speculative digital assets appear safer than they are.
At the same time, the RBI reportedly urged lawmakers to clearly separate cryptocurrencies from tokenized government securities, corporate bonds, and other regulated financial assets to ensure that restrictions on crypto do not slow the growth of tokenization.
India’s crypto debate continues despite rankings
The reported recommendations come despite India ranking first in Chainalysis’ 2025 Global Crypto Adoption Index. However, the RBI reportedly questioned the methodology used to measure crypto adoption, suggesting that private-sector rankings may not accurately reflect market conditions.
The committee’s review is expected to play a key role in shaping India’s future approach to digital assets as regulators continue weighing innovation against financial stability.
Earlier this year, India’s central bank pushed for a new idea that could reshape how BRICS nations move money across borders, linking their official digital currencies to simplify trade and tourism payments as global politics grow more fragmented. RBI advised the government to place a proposal on the agenda for the 2026 BRICS summit, which India will host.
RBI revives a familiar 2018 strategy
The latest proposal replicates the RBI’s 2018 move that barred regulated financial institutions from offering banking services to crypto-related businesses. While the measure did not ban crypto ownership, it effectively cut exchanges off from the banking system.
India’s Supreme Court overturned that directive in 2020, ruling that the RBI had not provided enough evidence that regulated entities had suffered harm. A year later, the central bank clarified that banks could not rely on the invalidated circular but could continue enforcing know-your-customer, anti-money laundering, and foreign exchange compliance rules for crypto-related transactions.
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