😱 India🇮🇳 : the Reserve Bank of India proposes barring banking institutions from using cryptocurrencies and private stablecoins

😱 India🇮🇳 : the Reserve Bank of India proposes barring banking institutions from using cryptocurrencies and private stablecoins

At the same time, the regulator intends to preserve the possibility of regulated tokenization of financial assets.

➡️ Last Thursday, the Deputy Governor and the Executive Director of the Reserve Bank of India (RBI) presented a technical report to the Parliamentary Standing Committee on Finance, outlining the rationale behind the proposal. According to the regulator, applying the traditional financial regulatory framework to cryptocurrencies could lend legitimacy to highly speculative assets and create a false sense of security among users.

➡️ Tokenized government securities, corporate bonds and other regulated financial instruments would continue to be permitted.

➡️ The proposal would not prevent individuals from owning or trading cryptocurrencies, as the restrictions would apply exclusively to banking institutions.

➡️ The RBI has been advocating this initiative for several years. However, in 2020, the Supreme Court of India struck down a similar measure following a lawsuit filed by several cryptocurrency exchanges and the Internet and Mobile Association of India (IAMAI). The Court acknowledged the Reserve Bank's authority to adopt preventive measures but concluded that, in that case, the principle of proportionality had not been respected, as the RBI failed to demonstrate the existence of any concrete harm.

➡️ Context: India ranked first in Chainalysis' 2025 Global Crypto Adoption Index. However, the Reserve Bank of India questioned the methodology used to compile the ranking, meaning the findings could be subject to further review.

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