Central Bank’s Recommendations and Warnings
In its submission, the RBI reportedly argued that prohibition remains a recognized policy option for dealing with digital assets. The central bank specifically recommended preventing the use of any cryptocurrency in payments and settlements, and called for restrictions on the exposure of banks and other financial institutions to such assets. The RBI warned that applying the same regulatory framework used for traditional finance to cryptocurrencies could produce an unintended consequence: legitimizing speculative assets and creating a false sense of safety among users.
The timing of the central bank’s intervention is strategically important. Lawmakers are in the process of preparing a comprehensive report on India’s digital asset policy, and the RBI’s submission is a clear bid to influence the outcome. The central bank’s stance is consistent with its long-held view that cryptocurrencies pose a threat to financial stability, and it continues to insist that the banking system must remain insulated from these assets. A Chainalysis report cited in the source material ranked India highly on its 2025 Global Crypto Adoption Index, underscoring the scale of interest the central bank is trying to contain.
Drawing a Line: Crypto vs. Tokenised Instruments
Notably, the RBI urged policymakers to make a clear distinction between cryptocurrencies and tokenised versions of government securities, corporate bonds, and other regulated financial instruments. While the central bank wants tight restrictions on crypto, it also emphasized that those restrictions should not hinder the development of tokenisation—a process that converts ownership rights in traditional financial assets into digital tokens that can be traded on regulated platforms. The RBI wants the door left open for tokenisation even as it seeks to wall off the banking system from unbacked or private digital currencies.
This nuance reflects a broader historical caution at the RBI toward innovations that could disrupt monetary control or introduce new systemic risks. The Reserve Bank of India, established in 1935 and nationalised in 1949, serves as the country’s monetary authority and regulator of its banking system. Over the decades, it has acted to prevent unregulated instruments from gaining a systemic foothold, whether through currency controls, capital restrictions, or supervisory guidance. Its current position against cryptocurrencies and private stablecoins aligns with earlier efforts to limit bank and payment system exposure to assets that lack sovereign backing or full regulatory oversight.
Context and Implications for India’s Digital Asset Policy
The parliamentary committee is expected to release its report in the coming weeks, and the RBI’s intervention signals its intent to shape how both crypto and tokenised assets are treated in national policy. For now, the central bank has drawn its line: keep banks insulated, keep cryptocurrencies out of payment systems, and keep the door open for regulated tokenisation. Whether the committee agrees will become clearer when the report is published.
For readers, this debate touches directly on financial safety, consumer protection, and the evolving role of digital money in India’s economy. The RBI’s stance matters precisely because India’s parliament is preparing a national digital asset policy that could determine whether crypto remains outside mainstream finance or gains indirect legitimacy through regulated channels. The RBI’s decades-long mandate has included safeguarding the financial system from risks that could threaten stability—a principle now being applied to the fast-growing world of digital assets. The outcome of the parliamentary report will signal whether India’s policymakers align with the central bank’s caution or allow a more permissive approach.
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