India’s central bank is taking a dual approach to digital assets. It is supporting tokenization and blockchain style infrastructure while warning strongly against privately issued cryptocurrencies and stablecoins. The Reserve Bank of India wants the efficiency of distributed ledgers without surrendering control over money, regulation, or capital flows.
At the Kautilya Economic Conclave in New Delhi, RBI Governor Sanjay Malhotra said India remains cautious about crypto because of risks to monetary sovereignty, monetary policy, capital flows, and financial stability. He noted that these risks are especially serious in emerging markets with capital controls. He also highlighted the “singleness of money” principle, which requires all forms of money in the same currency to be interchangeable at the same value. In his view, many privately issued coins and foreign stablecoins could undermine that safeguard.
Malhotra argued that India does not need crypto for payments because domestic systems are already fast and cheap. Instead, the central bank prefers CBDCs and links between regulated payment systems for cross border transfers. Recent reporting notes that the RBI has advocated a national policy “leaning towards prohibition” and has pressed to bar regulated banks from holding or trading crypto or private stablecoins. It is especially concerned about stablecoins denominated in foreign currencies because they could erode rupee control.
While pushing back on private crypto, the RBI is advancing distributed ledger technology, tokenization, and a central bank digital currency. India has begun pilots for programmable CBDCs, tokenized certificates of deposit, and tokenized corporate bonds settled in wholesale digital rupees. In these pilots, securities are recorded on distributed ledgers, but cash settlement happens in central bank money. These instruments remain regulated securities, not cryptocurrencies, and they stay inside India’s existing banking and capital markets framework. The design aims to capture blockchain benefits such as faster settlement and programmability while avoiding open token trading and price speculation seen in public crypto markets.
This means India is trying to get the efficiency of blockchain rails without giving up control of money, regulation, or capital flows to unregulated tokens. Crypto providers already fall under India’s anti money laundering law and must register with FIU India. Recent notices have been issued against several offshore platforms. The Income Tax Act now defines virtual digital assets and sets tax and reporting obligations. These rules build a compliance perimeter around any business serving Indian users, even though a comprehensive crypto law remains pending.
Looking ahead, the most important signals will be whether the government formalizes a prohibition leaning policy, how wide CBDC usage becomes, and whether tokenization pilots expand beyond bonds and deposits. For builders, the practical path in India is likely regulated tokenization and CBDC related infrastructure rather than unregulated public crypto. The central bank is drawing a hard line between speculative, privately issued crypto assets and tightly regulated tokenized instruments and CBDCs. For crypto participants, the environment is moving toward heavier compliance and limited room for open coins, while onchain versions of traditional financial products and payments are set to grow inside India’s regulated system.
