Reserve Bank of India (RBI) Governor Sanjay Malhotra expressed concern that cryptocurrencies could pose a threat to India’s financial stability. Speaking at a media interaction following the RBI Monetary Policy Committee review, Malhotra stated that while there are no new updates regarding crypto, a government-appointed committee is currently evaluating the issue.
Highlighting the risks, Malhotra reiterated the RBI’s long-standing position that cryptocurrencies could potentially disrupt both financial stability and the effectiveness of monetary policy.
His remarks follow recent comments by the Supreme Court, which questioned the government’s delay in regulating the crypto sector. The Court noted that the imposition of a 30% tax on crypto trading profits suggests some form of legal recognition, thereby making the lack of regulation even more pressing. The issue came up during a hearing on a cryptocurrency-related case, where the Court acknowledged the complexity of handling such matters without clear guidelines.
The government is reportedly in the final stages of preparing a discussion paper outlining possible policy approaches to crypto assets. This paper is expected to be released soon for public feedback and will incorporate global best practices and insights from international bodies such as the IMF and the Financial Stability Board.
India already enforces strict taxation on crypto, including a 1% TDS on transactions above ₹10,000 and a 30% tax on capital gains introduced in 2022. Regulatory pressure has intensified, with several crypto exchanges, including Binance and KuCoin, receiving show-cause notices from the Financial Intelligence Unit for operating without proper compliance.
These measures have led many crypto firms to exit the Indian market, with platforms like OKX, Pillow, Flint, and WeTrade ceasing operations. Earlier this year, Bybit temporarily halted services for Indian users, and recently, CoinDCX’s CTO Vivek Gupta stepped down after five years with the company.
