RBI Governor Issues Warning: Cryptocurrencies Threaten Financial Stability in India
Reserve Bank of India (RBI) Governor Sanjay Malhotra has once again voiced strong concerns about the potential risks cryptocurrencies pose to India’s financial stability. During a recent media interaction following the RBI Monetary Policy Committee review, Malhotra emphasized that while there are currently no new regulatory updates, a government-appointed committee is actively assessing the crypto landscape in India.
Malhotra reiterated the RBI’s consistent stance that cryptocurrencies could disrupt the country’s financial stability and undermine the effectiveness of monetary policy. His warning comes at a time when regulatory uncertainty continues to surround the Indian crypto market.
Supreme Court Presses for Crypto Regulation in India
The RBI Governor’s comments follow recent observations by the Supreme Court of India, which questioned the government’s delay in establishing a clear regulatory framework for cryptocurrencies. The Supreme Court pointed out that the introduction of a 30% tax on crypto trading profits implies a degree of legal recognition, making the absence of comprehensive regulation even more critical. This issue was highlighted during a hearing on a cryptocurrency-related case, where the Court acknowledged the challenges of managing the sector without clear guidelines.
Government Prepares Discussion Paper on Crypto Policy
In response to these concerns, the Indian government is reportedly finalizing a discussion paper that will outline potential policy approaches to crypto assets. This much-anticipated document is expected to be released soon for public consultation and will incorporate global best practices, drawing insights from international organizations such as the International Monetary Fund (IMF) and the Financial Stability Board.
Strict Crypto Taxation and Regulatory Pressure in India
India already enforces stringent taxation on cryptocurrencies, including a 1% TDS (Tax Deducted at Source) on transactions exceeding ₹10,000 and a 30% tax on capital gains from crypto trading, both introduced in 2022. Regulatory scrutiny has also intensified, with several major crypto exchanges—including Binance and KuCoin—receiving show-cause notices from the Financial Intelligence Unit (FIU) for non-compliance with Indian regulations.
Impact on Crypto Exchanges and Industry Leaders
These regulatory measures have prompted several crypto platforms to exit the Indian market. Notable exchanges such as OKX, Pillow, Flint, and WeTrade have ceased operations in India. Earlier this year, Bybit temporarily suspended its services for Indian users, and most recently, CoinDCX’s Chief Technology Officer, Vivek Gupta, stepped down after a five-year tenure.
The Road Ahead for Crypto Regulation in India
As India moves closer to releasing its crypto policy discussion paper, the future of cryptocurrency regulation remains uncertain. Stakeholders across the industry are eagerly awaiting clearer guidelines that balance innovation with financial stability and consumer protection.
