India's Crypto Containment
RBI Presses Lawmakers to Restrict Bank Crypto Exposure, Prohibition Remains Option
Anonymous
Key Points
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The RBI's 2018 circular barred banks from dealing with crypto exchanges and related services; The Supreme Court overturned that circular in 2020, recognizing the RBI's preventive powers but questioning proportionality and the impact on regulated entities' access to banking.
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Chainalysis ranked India first in its 2025 Global Crypto Adoption Index, but the RBI challenged the methodology used by private-sector rankings to measure adoption.
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This session marked the first direct presentation of RBI's views on cryptocurrency to the Standing Committee on Finance, signaling a public containment stance on crypto exposure and banking involvement.
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RBI highlighted that its digital rupee (CBDC) uptake remains modest, with roughly 10 million e-Rupee users, while the UPI processes hundreds of millions of transactions daily.
India's central bank is pushing lawmakers to cut banks' ties to crypto and privately issued stablecoins — and it is not ruling out an outright ban. The Reserve Bank of India presented its containment strategy directly to Parliament's Standing Committee on Finance, marking the first time the RBI has formally laid out its crypto stance to the committee, according to Crypto Briefing.
The RBI wants to stop banks and other regulated financial institutions from touching crypto assets. It also warned that treating crypto like normal financial assets could give investors a false sense of security, according to Bloomingbit.
RBI Draws a Hard Line Around Banks and Crypto
The RBI's core ask is a containment approach. It wants rules that stop crypto from being used in payments and settlements, while stopping short of banning people from owning crypto outright. The bank argued that letting crypto bleed into regulated finance creates risks that are hard to see and harder to measure, according to MEXC.
Officials also stressed the need to separate cryptocurrencies from tokenized government securities and corporate bonds. The RBI said lumping them together could choke off legitimate financial innovation — a signal that it supports regulated tokenization, just not crypto riding on its coattails, according to KuCoin.
A Policy Battle With Roots in 2018 Court Fight
This is not the RBI's first attempt to wall off banks from crypto. In 2018, the RBI issued a circular barring banks from dealing with crypto exchanges and related services. The Supreme Court struck it down in 2020. The court recognized the RBI's power to act preventively but said the ban was disproportionate, according to Crypto Briefing.
Now the RBI is back, this time through Parliament rather than regulatory orders. By bringing its case directly to the Standing Committee on Finance, the bank is seeking a legislative path — one that would be harder to overturn in court, according to Bitget.
India Tops Crypto Adoption Charts, but RBI Disputes the Data
Chainalysis ranked India first in its 2025 Global Crypto Adoption Index. That is a striking headline. But the RBI pushed back, challenging the methodology behind private-sector adoption rankings. Officials questioned how adoption is measured and whether the numbers reflect real financial risk, according to Bloomingbit.
The debate matters because adoption figures shape policy urgency. If India truly leads the world in crypto use, that strengthens the case for fast regulation. The RBI's skepticism of the data suggests it wants to set the terms of that debate before lawmakers do.
Digital Rupee Lags Far Behind as Stablecoin Threat Grows
The RBI is also protecting its own digital currency project. Its e-Rupee, India's central bank digital currency or CBDC, has attracted only about 10 million users. By contrast, the UPI payments network handles hundreds of millions of transactions every day, according to KuCoin.
The RBI warned that private stablecoins — digital tokens pegged to currencies like the US dollar — pose a direct threat to monetary sovereignty. If stablecoins replace the rupee in everyday transactions, the central bank loses control over money supply and policy. That is the deeper fear driving the RBI's push to keep banks out of crypto entirely, according to MEXC.
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