India delays crypto regulation, fearing it might legitimize digital assets and introduce systemic risks, says RBI.
Contents
2 min read
India’s Crypto Regulation Dilemma
India’s regulatory authorities are treading cautiously on the introduction of comprehensive cryptocurrency regulations. The Reserve Bank of India (RBI) has expressed concerns that formalizing rules could inadvertently legitimize digital assets and introduce systemic risks to the financial system. This stance reflects a broader hesitation among Indian regulators to fully embrace the burgeoning crypto sector.
Related: India Advances in CBDC Development and Cross-Border Payments Platform
Regulatory Concerns
According to a report by Reuters, RBI documents indicate that regulating cryptocurrencies could cause the sector to become systemic, posing challenges in risk containment. While an outright ban might mitigate speculative risks, it would not address peer-to-peer transactions or decentralized exchange activities.
Current Crypto Landscape in India
Related: India Poised to Pioneer Crypto Regulation by 2025, Predicts Binance
Despite the absence of a comprehensive regulatory framework, India imposes a 30% tax on gains from digital assets and mandates registration for foreign crypto exchanges operating within its borders. In late 2023, India’s Financial Intelligence Unit (FIU) took steps to block several global crypto exchanges, including Binance and Huobi, due to non-compliance with local registration requirements. However, these platforms have since returned after securing necessary approvals from the FIU, as reported by Cointelegraph.
Adoption vs. Regulation
Despite regulatory apprehensions, India is a global leader in cryptocurrency adoption. The 2025 Geography of Crypto Report by Chainalysis highlights India’s top position in crypto adoption across various categories. Yet, industry experts, like Mithil Thakore, CEO of Velar, point out a paradoxical gap between adoption metrics and real-world usage. This discrepancy underscores the complex landscape India navigates as it balances innovation with regulatory prudence.
Related: India Reaches 5 Million CBDC Users Amid Cautious Digital Currency Strategy
Future Outlook
As India grapples with its regulatory strategy, the debate continues over how to effectively manage the risks associated with cryptocurrencies without stifling innovation. The country’s approach will likely influence its position in the global crypto market and set precedents for other nations facing similar challenges.
Emily brings a decade of expertise in blockchain technology and decentralized finance (DeFi). She specializes in market trends and regulatory developments, providing in-depth analyses that resonate with seasoned investors and beginners alike. With a background in financial journalism, she is dedicated to bringing clarity to the fast-paced world of crypto.
