RBI Reaffirms Near-Ban Stance on Crypto as India Tax Authorities Warn of Evasion Risk

The Reserve Bank of India has reaffirmed its longstanding view that cryptocurrencies should face regulation amounting to a near ban.

Reuters reported on July 8, citing Indian government documents it obtained, that the RBI recently held internal discussions indicating crypto policy should "lean toward prohibition." India has yet to adopt a formal policy either banning or regulating digital assets, Reuters said, but the documents point to a preference among key institutions for tough restrictions.

The RBI wants banks and financial institutions barred from holding cryptocurrencies and stablecoins. The goal is to prevent risks in the crypto market from spilling into the broader financial system. Citing a source familiar with the central bank's internal deliberations, Reuters reported that the RBI favors near-ban measures to keep cryptocurrencies outside the formal financial system.

India's tax authorities also hold a negative view of crypto. They see cryptocurrencies as highly susceptible to tax evasion. Officials said price volatility and the lack of a unified valuation standard make them difficult to tax.