India panel hears RBI opposition to legal crypto status and bank exposure

India’s central bank told a parliamentary finance panel it supports a containment strategy for cryptocurrencies that would keep them out of payments, settlements and the banking system, reinforcing its opposition to legalizing the asset class and to allowing broader bank exposure. The RBI said conventional regulation would risk legitimizing speculative products, create a false perception of safety for retail users, and expose regulated finance to unstable assets. It advised lawmakers to prohibit crypto for payments and settlements and to impose tight limits on direct banking-sector exposure, while seeking to have that separation written into law after the Supreme Court struck down its earlier banking ban in 2020. The RBI also challenged claims that India leads the world in crypto adoption, arguing that the Chainalysis methodology overstates adoption in populous countries. Data submitted to the committee put India’s crypto market at 54 FIU-registered service providers and 39.3 million KYC-verified users holding assets worth about 20,437 crore rupees, or roughly $2.4 billion. Committee members nonetheless pointed to India’s top ranking in the 2025 Global Crypto Adoption Index and questioned how the country could ignore capital flight while jurisdictions including Indonesia, Hong Kong and the UAE regulate the sector. The policy debate remains split. The Securities and Exchange Board of India has earlier indicated it could regulate tokens classified as securities, while the RBI declined to answer that question in the hearing and said it would respond in writing. The central bank drew a distinction between cryptocurrencies and tokenized government securities, indicating that regulated tokenized bond markets could still develop even as crypto speculation is walled off. India already taxes crypto gains at 30% and applies a 1% levy on each trade, while requiring exchanges to register with the Financial Intelligence Unit. The parliamentary panel is due to meet the Department of Economic Affairs on July 15 before finalizing recommendations for the monsoon session, when lawmakers are expected to decide whether to back separation from the formal financial system or move toward a framework closer to models such as MiCA.