India’s central bank reasserted a preference for a crypto policy “leaning towards prohibition,” while the country’s tax department separately warned that trading through offshore exchanges is difficult to track, according to government documents reviewed by Reuters.
What the RBI and Tax Department Said
The Reserve Bank of India said in documents that banks and financial institutions should be barred from holding, trading, or gaining any exposure to crypto assets and privately issued stablecoins, citing contagion risk to the regulated financial system. Indian banks are not currently prohibited from dealing in cryptocurrency, but major lenders have avoided the industry following repeated warnings from the RBI.
India’s central bank also raised concerns specifically about stablecoins. Foreign-currency-backed stablecoins pose a threat to domestic monetary sovereignty, while rupee-backed tokens could reduce government revenue from issuing its own currency and add financial stability risk during periods of market stress.
Separately, India’s tax department found that fewer than 25% of the 645,000 individuals who conducted crypto transactions in the financial year ending March 2023 reported those transactions on their tax returns. The department said transactions routed through offshore exchanges and private wallets make it difficult to identify beneficial owners and collect taxes, and that rupee-denominated peer-to-peer trades are similarly hard to trace.
India taxes crypto gains at a flat 30% rate, and a separate 1% Tax Deducted at Source applies to every transaction. For a broader look at how cross-border crypto transfers are regulated elsewhere, our guide on crypto remittance rules in the US addresses a comparable enforcement challenge in another jurisdiction.
Where This Leaves India’s 39 Million Crypto Holders
India has operated in a legal gray zone for crypto since an earlier RBI-led banking ban was struck down by the courts. A 2021 draft law to ban private cryptocurrencies was never introduced in Parliament, and a formal discussion paper on regulation has been repeatedly delayed. As of May, India had nearly 39 million crypto traders holding an estimated $2.1 billion in digital assets, according to tax department estimates cited by Reuters.
India ranked first in Chainalysis’s 2025 Global Crypto Adoption Index, a ranking the RBI disputes on methodology grounds. That tension between one of the world’s largest crypto user bases and a central bank pushing for prohibition is likely to continue shaping how India’s policy develops.
What this means for you: If you hold crypto in India or trade through offshore exchanges accessible from India, this signals continued regulatory pressure rather than an imminent ban. No formal prohibition policy has been adopted, but the direction of internal government thinking has shifted toward tighter restrictions rather than the limited regulatory clarity Indian officials floated as recently as September.
