India’s RBI Wants Banks To Stay Away From Crypto, Even Ready To Ban It!

The Indian government, which collected nearly ₹18.38 lakh crore (around $193.5 billion) in tax revenue during the 2025-26 financial year, is set to isolate banks from crypto. 

India’s biggest bank, the Reserve Bank of India (RBI), has proposed its ‘containment’ approach to cryptocurrencies, aiming to keep banks away from crypto transactions and private stablecoins while allowing regulated tokenization.

Meanwhile, the Indian government wants to tax the crypto but also wants to keep a distance. 

RBI Governor Wants Banks Away From Crypto

On 2 June, the RBI Deputy Governor Rohit Jain and RBI Executive Director P. Vasudevan appeared before the Parliamentary Standing Committee on Finance and explained the RBI’s official views on cryptocurrencies.

During the appearance, the Governor said that cryptocurrencies should not be used for payments and that banks should stay away from crypto-related businesses.

The central bank also warned that treating crypto like normal financial products could make people think it is safe and officially approved, even though it remains a risky investment.

The reasons behind the RBI’s stance are the rise in financial crimes involving digital assets. During the 2024-25 financial year, 49 cryptocurrency exchanges were registered with the Financial Intelligence Unit (FIU). 

According to the agency, crypto transactions were repeatedly linked to scams, online fraud, illegal gambling networks, unaccounted money transfers, and peer-to-peer abuse.

Therefore, the RBI said that banning some crypto activities is still an option.

Blockchain Gets Support, Crypto Doesn’t

Actually, what was surprising from the RBI side was that they do not oppose blockchain technology itself. 

Instead, it has asked policymakers to clearly separate cryptocurrencies from tokenized financial assets such as government securities and corporate bonds, allowing tokenization to develop without encouraging wider crypto adoption.

Crypto Trading Remains Legal in India

Meanwhile, the central bank continues to warn against crypto adoption, but crypto trading remains legal in India. Although digital assets are not recognized as legal tender.

Despite this, investors are still paying a 30% tax on profits and 1% TDS on every transaction. 

Also, last month, the FIU asked major crypto exchanges to report over-the-counter (OTC) transactions worth more than $10,000, showing that India is tightening regulation rather than shutting the industry down completely.