India’s central bank has restated its cautious position on cryptocurrencies while reaffirming support for the technology that underpins them, according to U.today. Reserve Bank of India Governor Sanjay Malhotra said at the Kautilya Economic Conclave in New Delhi that India’s approach to crypto remains cautious because of the potential effects on monetary sovereignty, monetary policy and capital flow.
The remarks, reported by U.today, echo the RBI’s long-held skepticism toward privately issued digital assets. Malhotra’s comments came at a public event in New Delhi, where he distinguished between crypto assets and the distributed ledger technology that supports them.
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Key facts
- RBI Governor Sanjay Malhotra spoke at the Kautilya Economic Conclave in New Delhi.
- He said India’s approach to crypto remains cautious because of risks to monetary sovereignty, monetary policy and capital flow.
- The RBI is strongly supportive of distributed ledger technology and tokenization.
- The RBI has previously warned that mass crypto adoption could weaken monetary policy and expose the system to financial stability risks.
- In July, Reuters reviewed government documents showing the RBI still favored a national crypto policy leaning toward prohibition.
Why the RBI draws a line between crypto and blockchain
Malhotra’s comments reflect a distinction the RBI has drawn for years: it sees value in the technology behind digital assets, including tokenization and distributed ledgers, but not in privately issued currencies. In his view, the benefits of blockchain-style technology do not depend on crypto assets existing.
The governor cited the principle of “singleness of money” as a top concern. Under that principle, all forms of money in the same currency should be exchangeable at the same rate, so that cash rupees and rupees held at commercial banks carry equal value. A proliferation of privately issued currencies or similar instruments could disrupt that system if consumers end up holding assets whose value or backing differs sharply from sovereign money.
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Malhotra also pointed to the possible effects of crypto on monetary policy and capital flows, which he said matter especially for emerging economies that restrict cross-border capital movement. The RBI has previously warned that widespread crypto adoption could blunt monetary policy, weaken capital-flow management and add to financial and macroeconomic stability risks.
Payments and cross-border flows
The governor pushed back on the argument that crypto is needed to improve payments. India already has infrastructure for fast, cheap and convenient domestic payments, he said, so domestic payments are not the problem crypto would solve. Cross-border payments are a more important problem, he added, but even there the RBI sees central bank digital currencies and interconnected regulated payment systems as alternatives to crypto.
On regulation, Malhotra’s language was measured, but the RBI has taken harder positions internally. In July, Reuters reviewed government documents showing the central bank still tilted toward a national crypto policy that leaned toward prohibition. The RBI had also reportedly pressed for regulated banks and other financial institutions to be barred from holding, trading or having exposure to crypto assets or private stablecoins.
Foreign-currency stablecoins are a particular concern for the central bank. It worries that mass adoption could dilute monetary sovereignty and push financial activity outside domestic banking and currency systems.
Why it matters
India is one of the largest crypto markets by user numbers, so the RBI’s position shapes what banks and licensed financial institutions can do with digital assets. The central bank’s support for tokenization and distributed ledgers leaves room for regulated innovation, while its caution on private crypto and stablecoins keeps pressure on trading and custody outside the banking system. For global stablecoin issuers, India’s stance adds to a pattern of central banks in emerging economies treating foreign-currency tokens as a monetary policy question rather than only a consumer protection one.
What to watch
India’s internal debate over crypto regulation is still unresolved, and the RBI’s reported tilt toward prohibition is a key input. Any formal government policy paper or draft legislation would clarify whether the RBI’s cautious stance hardens into restrictions on banks and stablecoins, or whether tokenization gets a separate, more permissive track.
This article is not financial advice. Crypto markets are volatile and uncertain, and nothing here should be read as a recommendation to buy or sell any asset.
Source: U.Today
