by AK Arora 
“CBDCs could actually be able to kill whatever little case that could be for private cryptocurrencies.”
That was RBI Deputy Governor T. Rabi Sankar, speaking at an IMF seminar — not in some distant year, but as part of a consistent message the Reserve Bank of India has repeated for over a decade. While India’s courts have settled the legal status of crypto and the Finance Ministry has built a tax framework around it, the RBI itself has never wavered from one core position: cryptocurrencies have no place in India’s financial system, and the central bank’s own digital rupee is the answer.
This is not simply a regulatory timeline. It is the story of an institution that has consistently opposed an entire asset class for reasons rooted in its core mandate — and has spent equal energy building its own competing alternative.
Why the RBI Opposes Crypto: The Institutional Logic
To understand the RBI’s stance, you need to understand what a central bank actually exists to do.
The RBI’s core mandate includes maintaining monetary stability, managing the currency supply, ensuring financial system stability, and protecting consumers within the regulated banking sector. Cryptocurrencies challenge nearly every part of that mandate simultaneously.
As Deputy Governor Rabi Sankar explained directly: unbacked cryptocurrencies “have no underlying cash flow, no issuer, therefore no value” and cannot be considered financial assets in the way the RBI defines them. This is not a casual dismissal — it reflects the RBI’s formal position that an asset without a central issuer, without cash flow backing, and without any regulatory recourse mechanism is fundamentally incompatible with the kind of system the central bank is mandated to protect.
Furthermore, the RBI has consistently worried about crypto’s implications for monetary sovereignty. If a meaningful share of transactions move to assets the central bank cannot control or track, its ability to manage inflation, interest rates, and financial stability weakens. This concern has remained constant from the RBI’s earliest warnings in 2013 through to its current leadership in 2026.
The RBI’s Long Memory: Key Statements Across the Years
Unlike many regulatory bodies that have softened their stance over time, the RBI’s institutional position on crypto has remained remarkably consistent across multiple governors and deputy governors.
2013: The RBI’s first public advisory warned citizens about the risks of virtual currencies, citing concerns about money laundering, terrorism financing, and the absence of regulatory oversight.
2018: The RBI’s circular instructing banks to sever ties with crypto businesses represented the most aggressive action any major central bank had taken against crypto at that point.
2021-2022 (around the time of the Cryptocurrency Bill discussions): Deputy Governor Sankar argued publicly that the introduction of CBDCs could eliminate whatever limited case existed for private cryptocurrencies, framing the digital rupee explicitly as a superior alternative rather than simply a parallel innovation.
October 2025: At Business Standard’s BFSI Summit in Mumbai, Sankar reaffirmed the RBI’s “firm position against private cryptocurrencies,” stating: “Our stance on crypto is decided entirely by the way we have analysed and looked at the basic character of cryptos and the purpose they can serve.”
November 2025: RBI Governor Sanjay Malhotra — who took over the institution’s leadership — continued the same line, stating the RBI would prefer wider use of its own CBDC for payments and urging central banks worldwide to adopt CBDCs over stablecoins for cross-border payments.
This continuity across different individuals holding the Governor and Deputy Governor positions suggests the scepticism is institutional rather than personal — a settled RBI position that persists regardless of who occupies the top roles.
The RBI vs the Finance Ministry: A Visible Tension
One of the most interesting dynamics in India’s crypto story is the gap between the RBI’s hardline position and the more measured stance taken by India’s broader government.
While the RBI has consistently opposed private cryptocurrencies, the Finance Ministry’s Department of Economic Affairs has taken a more deliberative approach — introducing the 30% tax and 1% TDS framework in 2022 rather than an outright ban, and committing to release a formal consultation paper on cryptocurrency policy.
Governor Malhotra has explicitly acknowledged this division of responsibility, stating that the government, not the RBI, will make the final decision on crypto regulation, with a working group already reviewing potential policy approaches. This is a notable clarification — it confirms that despite the RBI’s vocal opposition, the central bank does not have unilateral authority to ban or comprehensively regulate crypto in India. That power rests with the government through legislation.
This tension explains much of the apparent inconsistency in India’s crypto policy that confuses observers. The RBI can warn, advise, and restrict banking access — as it did in 2018 — but cannot single-handedly determine crypto’s ultimate legal status. The Supreme Court’s 2020 ruling, which struck down the RBI’s banking restriction, demonstrated the limits of the central bank’s unilateral authority on this issue.
The Digital Rupee: RBI’s Answer to Crypto
While opposing private cryptocurrencies, the RBI has invested heavily in building its own blockchain-based alternative: the Digital Rupee (e₹), India’s Central Bank Digital Currency.
Retail CBDC Pilot
The RBI launched its retail digital rupee pilot in December 2022, allowing select banks to offer e₹ wallets to consumers for everyday transactions. The retail CBDC is designed to function alongside UPI rather than replace it, positioned as a natural extension of India’s broader Digital Public Infrastructure — alongside Aadhaar, UPI, and DigiLocker.
Wholesale CBDC Pilot
Less publicly visible but arguably more significant, the RBI launched a wholesale CBDC pilot in 2022-23 specifically for inter-bank settlement and secondary bond market trading. This is where blockchain-style technology offers the RBI genuine institutional value — faster settlement, greater transparency, and reduced counterparty risk between regulated financial institutions, without any of the volatility or anonymity concerns associated with private crypto.
Tokenisation Pilot (2025)
In late 2025, the RBI announced a new tokenisation pilot allowing banks to issue digital tokens representing traditional financial assets — certificates of deposit, stocks, and bonds — settling using the wholesale CBDC as the underlying base layer. RBI officials have stressed that this approach manages tokenisation risks by building regulatory guardrails into the system from inception, rather than allowing innovation to outpace oversight as occurred with private crypto markets globally.
ARC: India’s Regulated Stablecoin Initiative
India is reportedly targeting a Q1 2026 launch for ARC, a Digital Rupee-pegged asset — effectively a regulated, rupee-backed stablecoin initiative distinct from the retail and wholesale CBDC pilots. This reflects the RBI’s broader strategy: rather than banning the concept of stable, blockchain-based digital value entirely, the central bank is working to ensure any such instrument remains denominated in and backed by the rupee under official oversight.
CBDC Diplomacy: The BRICS Dimension
The RBI’s digital currency ambitions extend beyond India’s domestic market into international monetary diplomacy.
With India assuming the BRICS chair from January 2026, the RBI submitted a proposal to the Union government to place the linking of BRICS nations’ CBDCs on the agenda for the 2026 BRICS summit. The stated aim, according to RBI officials, is not aggressive de-dollarisation but “optional diversification” — creating rupee-denominated payment corridors for trade between BRICS economies that reduce dependency on dollar conversion costs.
India has already signed agreements with the UAE to link their respective CBDCs and run joint pilot programmes. Given that all major BRICS economies — now expanded to include Iran, Ethiopia, the UAE, Egypt, and Indonesia as of January 2025 — already have CBDC pilots underway, the RBI’s proposal is positioned as timely infrastructure-building rather than speculative ambition.
This international dimension reveals something important about the RBI’s strategy: rather than competing with private crypto networks for cross-border payment use cases, the central bank’s explicit approach is to “build official pipes” — government-backed settlement infrastructure — as the preferred alternative to relying on private blockchain networks for international trade.
RBI’s Position on Stablecoins Specifically
The RBI has been notably more pointed in its criticism of stablecoins than of cryptocurrencies generally, viewing dollar-backed stablecoins as a distinct and arguably more concerning threat to monetary sovereignty.
Deputy Governor Sankar has explicitly contrasted CBDCs favourably against stablecoins, arguing that CBDCs “satisfy all attributes that money should have — fiat, single, trusted and representing value” while not posing the risks associated with privately issued stablecoins. This distinction matters because dollar-backed stablecoins like USDT and USDC have grown to a combined market capitalisation exceeding $300 billion globally as of late 2025 — a scale the RBI views as a potential vector for “dollarisation” risk in economies like India’s, where capital controls and currency stability remain policy priorities. For a detailed comparison of how these stablecoins function, read our USDT vs USDC guide.
This concern partly explains the urgency behind India’s own ARC initiative — a rupee-denominated alternative designed to capture the efficiency benefits of stablecoin-style instruments while keeping value denominated in and controlled through the domestic currency.
What This Means for Indian Crypto Investors
Despite the RBI’s consistent opposition, it is important to understand what the central bank’s stance does and does not affect in practice.
What remains unchanged: Crypto exchanges operating in India must register locally and meet compliance requirements, but they continue operating legally. Read our complete guide on is crypto legal in India for the current status. The Supreme Court’s 2020 ruling remains in force — the RBI cannot unilaterally cut off banking access to crypto businesses again without a new legal basis. The 30% tax and 1% TDS framework, set by the Finance Ministry rather than the RBI, continues to apply. Read our full guide on crypto tax in India for the complete framework.
What the RBI’s stance does affect: The persistent scepticism from the central bank has contributed to an environment where formal regulatory clarity — a comprehensive law specifically governing crypto exchanges, custody, and consumer protection — remains absent in India even years after the Supreme Court ruling. Banks and payment processors, aware of the RBI’s institutional position, have at times remained cautious about facilitating crypto-related transactions, even when not legally required to refuse them. For practical guidance on navigating this environment, read our how to buy cryptocurrency in India guide.
The likely trajectory: With the government’s promised consultation paper and ongoing working group review, India’s crypto policy will ultimately be determined through legislation — not through RBI advisories alone. However, given the RBI’s consistent influence on financial policy discussions, its preference for CBDC-based alternatives over private crypto is likely to continue shaping the broader government conversation.
RBI’s Crypto Stance: Timeline Summary
| Year | RBI Action/Statement | Context |
|---|---|---|
| 2013 | First public advisory warning citizens | Early caution, no legal force |
| 2018 | Banking circular cutting off crypto businesses | Most aggressive RBI action to date |
| 2020 | Supreme Court overturns RBI circular | Limits to RBI’s unilateral authority confirmed |
| 2022 | Retail + wholesale CBDC pilots launched | RBI builds its own alternative |
| 2022 | Dy Gov. Sankar: CBDCs can “kill” case for crypto | Clear institutional position stated |
| 2025 (Oct) | Dy Gov. Sankar reaffirms “firm position against private cryptocurrencies” | Continuity under current leadership |
| 2025 (Nov) | Governor Malhotra: government will decide crypto policy, not RBI | Clarifies RBI’s advisory-only role |
| 2025 (late) | Tokenisation pilot announced | RBI extends CBDC use cases |
| Q1 2026 | ARC rupee-pegged asset targeted for launch | RBI’s stablecoin-style alternative |
| 2026 | BRICS CBDC linkage proposal submitted | International dimension of RBI’s strategy |
FAQ
Has the RBI banned cryptocurrency in India?
No, not currently. The RBI’s 2018 circular restricting banking access to crypto businesses was overturned by the Supreme Court in March 2020. As of 2026, crypto remains legal to buy, sell, and hold in India, though the RBI continues to publicly express opposition to private cryptocurrencies.
Can the RBI ban crypto again in the future?
The RBI cannot unilaterally reinstate a banking ban without a stronger legal basis than its 2018 circular, which the Supreme Court found disproportionate. However, if the government’s planned crypto legislation, informed partly by RBI input, included restrictive measures, that would operate through formal law rather than an RBI circular alone.
What is the Digital Rupee and how is it different from cryptocurrency?
The Digital Rupee (e₹) is India’s Central Bank Digital Currency, issued and backed directly by the RBI, unlike cryptocurrencies which have no central issuer. It exists in both retail (consumer-facing) and wholesale (inter-bank settlement) forms, and is designed to complement rather than replace UPI.
Why does the RBI prefer CBDCs over stablecoins?
The RBI views CBDCs as fully backed, centrally issued, and monetarily stable by design, since they are direct liabilities of the central bank. Stablecoins, even when asset-backed, are privately issued and denominated predominantly in foreign currencies like the US dollar, which the RBI views as a potential risk to India’s monetary sovereignty and capital control framework.
Does the RBI or the government decide India’s crypto policy?
Governor Sanjay Malhotra has explicitly stated that the government — not the RBI — will make the final decision on comprehensive crypto regulation, with a working group currently reviewing policy options. The RBI’s role is advisory and supervisory regarding banking sector exposure, rather than having unilateral legislative authority over crypto’s legal status.
What is ARC and when will it launch?
ARC is a reported Digital Rupee-pegged asset that India is targeting for a Q1 2026 launch — effectively a regulated, rupee-backed stablecoin alternative developed under RBI oversight, distinct from the existing retail and wholesale CBDC pilots already underway.
Final Word
The RBI’s relationship with cryptocurrency is not a story of confusion or inconsistency, despite how it sometimes appears from the outside. It is the story of a central bank that has held one consistent institutional position for over a decade — private cryptocurrencies do not fit its definition of legitimate financial assets — while simultaneously building an alternative it considers superior: the Digital Rupee, in retail, wholesale, and now tokenised and cross-border forms.
The RBI cannot single-handedly determine crypto’s fate in India. That authority rests with the government and, ultimately, future legislation. However, the central bank’s consistent scepticism, repeated across multiple governors and deputy governors over more than a decade, has clearly shaped the cautious, tax-heavy, legislatively incomplete environment that defines India’s crypto landscape as of 2026.
Understanding this distinction — between what the RBI believes and what the RBI can actually control — is essential for anyone trying to make sense of India’s often-confusing crypto policy landscape.
Disclaimer: This article is for informational and educational purposes only and does not constitute legal or financial advice. RBI policy positions and government regulations are subject to change. Always consult official RBI and government sources for the most current information.
