The Reserve Bank of India (RBI) has reportedly endorsed a digital asset containment strategy to protect banks and other financial institutions from exposure to cryptocurrencies and stablecoins as lawmakers prepare a report on a national digital asset policy.
According to According to a report by The Economic Times, RBI Deputy Governor Rohit Jain and Executive Director P. Vasudevan presented the central bank’s view to the Parliamentary Standing Committee on Finance on Thursday.
In a briefing note submitted to the panel, the RBI reportedly stated that a ban remains a recognized policy option and recommended preventing the operate of cryptocurrencies in payments and settlements while limiting the exposure of the banking sector.
The central bank has reportedly warned that applying conventional regulations to cryptocurrencies could legitimize speculative assets and create a false sense of security among users. However, he urged policymakers to distinguish cryptocurrencies from tokenized government securities, corporate bonds and other regulated financial instruments so that restrictions do not hinder tokenization.
Chainalytic’s 2025 global cryptocurrency adoption index. Source: Chain Analysis
India ranking first in Chainalytic’s Global Crypto Adoption Index 2025, although the RBI has reportedly questioned the methodology behind the private sector adoption rankings.
RBI renews emphasis on isolating cryptocurrencies from banking
The latest proposal submitted by the RBI reflects the approach taken in 2018 when the central bank directed regulated financial institutions to stop trading in cryptocurrencies or providing services to individuals and companies associated with them.
This approach effectively cut off cryptocurrency exchanges from the Indian banking system without prohibiting individuals from owning or trading cryptocurrencies.
Supreme Court of India overturned circular dated March 2020 following a complaint filed by stock exchanges and the Internet Mobile Association of India. The court recognized the RBI’s power to take preventive action, but found that the measure failed the proportionality test, noting that the central bank had failed to demonstrate harm to the entities it regulated.
Related: India arrests Darwin Labs co-founder in connection with GainBitcoin fraud investigation
In May 2021, RBI explained that banks can no longer rely on the invalidated circular when warning customers against cryptocurrency transactions. However, it said regulated institutions could continue to apply know-your-customer, anti-money laundering and foreign exchange compliance requirements.
Warehouse: Bitcoin Separates From Tech Stocks, Ether ‘Selling Wave’: Market Moves
