According to a document reviewed by Reuters, the RBI reportedly believes that managing risks linked to cryptocurrencies through regulation would be difficult in India
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India, currently does not have a law to regulate cryptocurrencies, though the government has introduced measures to monitor their use. (Photo: Reuters)
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India is not keen to introduce a dedicated cryptocurrency law, and instead plans to maintain limited oversight of the sector, citing systemic risks, mentions a government document reviewed by Reuters.
The Reserve Bank of India (RBI), according to the note, stated that managing risks linked to digital assets through regulation would be difficult. Formal regulation could effectively grant cryptocurrencies “legitimacy” and “may cause the sector to become systemic”.
The government document observes that while an outright ban might curb what it calls the “alarming” risks from speculative assets, such a step would not prevent peer-to-peer transfers or trading on decentralised platforms.
India, currently does not have a law to regulate cryptocurrencies, though the government has introduced measures to monitor their use. This means that while cryptocurrencies such as Bitcoin and Ethereum are not considered a legal tender, they are also not banned and can be bought using crypto exchanges.
At present, Indian investors are estimated to hold about $4.5 billion in cryptocurrencies. The paper notes that the current exposure remains limited and does not pose a systemic risk to the country’s financial stability, Reuters reported.
It added that charting a clear way forward or identifying a uniform policy approach for crypto regulation is not straightforward, given the varying approaches adopted globally.
US regulates stablecoins
On July 18, United States (US) President Donald Trump signed the GENIUS Act—Guiding and Establishing National Innovation for US Stablecoins—introducing America’s first federal framework for dollar-pegged cryptocurrencies. The act mandates full reserve backing in liquid assets, monthly audits, and stronger consumer safeguards.
Stablecoins are digital assets, which are designed to maintain a stable value relative to a specific reference asset, like a fiat currency such as the US dollar.
The move, the Indian government document said, is going to impact both advanced and emerging economies, adding that it would require “close examination” by the government as most stablecoins in circulation globally are pegged to the US dollar.
Threats to payments stability
Although stablecoins are intended to maintain steady value, the document noted they can still be affected by market shocks or liquidity pressures, which may spill over into financial markets.
It also warned that extensive adoption could disrupt domestic payment networks like real-time inter-bank transfers and undermine India’s digital payments platform, the Unified Payments Interface (UPI).
While India remains at a crossroads, countries such as Australia, the United Kingdom (UK) and Japan have also adopted digital assets. China, meanwhile, has banned cryptocurrencies but is considering a yuan-backed stablecoin, according to a Reuters report.
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