India’s Central Bank Again Pushes for a Crypto Ban

The Reserve Bank of India is once again pushing a policy direction that leans toward banning cryptocurrencies, while the tax authority warns about difficulties tracking 645 000 traders and their transactions through offshore platforms.

This concerns government documents reviewed by Reuters. In them, the RBI asks that crypto assets be kept outside the banking system, while tax officials say that less than a quarter of the people who traded cryptocurrency in the financial year through March 2023 reported it in their tax returns. India, meanwhile, has nearly 39 million crypto traders with assets worth about $2.1 billion. This is no longer a small issue for a narrow circle of traders. It is a matter for everyone who puts money into crypto or withdraws it back into a bank.

Why is the RBI pushing for a ban again?

The central bank wants banks and financial institutions to avoid dealing with crypto assets and private stablecoins. The logic is simple: fewer links to banks means less risk that problems in the crypto market will spill over into the wider financial system.

In documents from May and June, the RBI explicitly writes about the risk of “contagion” to the financial system. This is not a new position. Back in 2018, a court overturned the de facto ban previously pushed by the RBI, and since then cryptocurrencies in the country have lived in a gray zone. Against this backdrop, the recent news about illegal crypto services in Belgium also looks interesting, because regulators in different countries are increasingly focusing not on advertising, but on control over money flows. And that is no surprise: when money moves quickly and rules lag behind, the state usually hits the brakes first.

What are tax officials unhappy about, and why does it matter?

India’s tax authority sees a different, very practical problem. Less than 25% of the 645 000 people who carried out crypto transactions in the financial year through March 2023 reported them in their tax returns. This is no longer theory, but a concrete failure in tax collection.

The challenge is made worse by offshore platforms, private wallets, and P2P deals in rupees. In such schemes, it is difficult to quickly identify the ultimate owner and calculate the tax. And in India, it is substantial: 30% on profits from cryptocurrencies. Another detail: tax officials complain about price volatility and the lack of unified standards for valuing assets for tax purposes. That is why this is not only about a ban, but also about accounting control. For an ordinary user, that sounds dry, but in practice it means something simple: any transfer can become a subject of questions.

Market reaction

The documents themselves show that there is no complete unity within the government. In September, the Ministry of Finance, after consultations with the RBI, supported the idea of limited regulatory clarity for virtual assets. But the new papers show a different, tougher mood.

“The central bank’s position is to ban [crypto] in order to keep cryptocurrencies outside the regulated financial system,” said a source familiar with the bank’s stance.

Additional context comes from the July meeting of the parliamentary finance committee. According to The Economic Times, the RBI at the meeting cited 54 crypto service providers registered with the FIU and 3.93 crore KYC-verified users, yet still did not support legal status for cryptocurrencies. This is an important signal: even with a large user base, the regulator is in no hurry to open the door wider. That means the market in the country lives not by demand, but by permissions.

• The RBI is once again pushing a course of restricting cryptocurrencies.

• The tax authority says less than 25% of 645 000 traders reported their transactions.

• India has nearly 39 million crypto traders.

• Total assets are estimated at about $2.1 billion.

• The tax on cryptocurrency profits in the country is 30%.

What does this mean for investors?

For Indian traders, this means one simple thing: the risk of tighter control is rising, not falling. If banks receive a clearer instruction not to work with crypto assets, moving money within the country will become even more inconvenient. For those already trading through offshore platforms, it also means more attention to the source of funds and tax trails.

But there is another layer here. At the same time, the RBI is promoting its own digital rupee, e₹-R, and in 2026–27 plans CBDC pilots for cross-border payments, DBT payouts, and business applications. In such a setup, the state is not simply against crypto; it is trying to keep under control precisely those digital monies that move through its infrastructure. For the market, this means that in India the battle is not about loud slogans, but about payment channels and tax accounting. And that already affects where and how people will be able to buy and sell assets. If you need to quickly withdraw funds into hryvnia, you can sell Bitcoin on Monobank without extra steps.

Frequently asked questions

Does the RBI’s position mean a full ban on cryptocurrencies in India?

No, for now it is a policy direction that leans toward a ban, not an adopted law. Cryptocurrencies in India have remained in a gray zone since 2018, because parliament has still not passed a separate law banning private tokens outright.

Why is India’s tax authority reacting so harshly to crypto?

Because it sees major losses in income control. Less than a quarter of the 645 000 traders reported their transactions, which makes tax collection harder at a 30% rate on cryptocurrency profits.

Are there many crypto users in India despite regulatory pressure?

Yes. Reuters cited nearly 39 million crypto traders and assets worth about $2.1 billion. This shows that demand has not disappeared, even if the rules are getting stricter.

The situation in India is simple and inconvenient at the same time: there are many users, even more tax issues, and the RBI wants to keep cryptocurrencies as far away from banks as possible. For the market, this is a signal to be more cautious, especially where trading goes through offshore channels and private wallets. The Indian case once again shows that when the state does not trust crypto, the first things under pressure are not prices, but payment routes.

This material is not financial advice. Cryptocurrency trading involves significant risks. Part of this text was prepared with the help of artificial intelligence based on public sources and reviewed by our editorial team.