Quick Take
- RBI told Parliament’s Standing Committee on Finance that crypto poses a risky economic threat.
- The central bank said crypto risks funding terror activity and drug trafficking, urging a ban.
- Chairman Bhartruhari Mahtab said the panel may issue its VDA report soon, shaping future policy.
In This Article
The Reserve Bank of India (RBI) has firmly opposed crypto legalisation, telling Parliament’s Standing Committee on Finance on July 2, 2026 that virtual digital assets (VDAs) pose a serious threat to the economy. The central bank made the submission during the committee’s seventh sitting on the subject, “A Study on Virtual Digital Assets (VDAs) and Way Forward,” according to PTI.
India currently taxes crypto gains at 30%, with 1% Tax Deducted at Source (TDS) on transfers, but has no dedicated law governing exchanges or investor protection. The Institute of Chartered Accountants of India (ICAI) appeared in a separate session and took a different view, backing a formal legal framework for VDAs.
StartupFeed Insight
RBI’s blunt threat-to-economy framing matters more than the tax debate that usually dominates crypto headlines. An estimated 73% of India’s crypto trading volume has already migrated to offshore platforms, so a prohibition-leaning stance from the central bank could push more volume abroad rather than pull it back onshore. Compliance teams, Web3 founders, and offshore-registered exchanges serving Indian users should watch the committee closely, since even a non-binding report can shape Budget-season tax and disclosure rules. StartupFeed expects the panel to table its VDA report by early 2027, likely recommending tighter offshore-transaction disclosure rather than an outright ban. By StartupFeed Desk.
RBI Crypto Legalisation Stance: Key Details
The July 2 hearing was the first time RBI officials presented their crypto legalisation views directly to the panel. The table below summarises the core facts from the sitting.
| Metric | Detail | Notes |
|---|---|---|
| Meeting Date | July 2, 2026 | 7th sitting on VDAs |
| Committee | Standing Committee on Finance | Chaired by Bhartruhari Mahtab |
| RBI Stance | Opposes legalisation | Calls VDAs a threat to the economy |
| ICAI Stance | Backs a legal framework | Wants principle-based accounting rules |
| Existing Crypto Tax | 30% on gains, 1% TDS | No dedicated VDA law yet |
The most telling detail is offshore migration: roughly 73% of Indian crypto trading volume now happens on foreign exchanges, according to figures cited during the committee’s Budget-season debates.
About RBI
The Reserve Bank of India (RBI), founded in 1935 and headquartered in Mumbai, is India’s central bank and banking regulator. It sets monetary policy, issues currency, and runs the pilot for the Central Bank Digital Currency (CBDC), also called the Digital Rupee or e-rupee. RBI has consistently opposed private cryptocurrencies since 2013, arguing they undermine monetary sovereignty.
What Does RBI’s Opposition Mean For The Crypto Sector?
RBI’s stance signals continued regulatory uncertainty for crypto exchanges and startups operating in India. The central bank argued that VDAs are privately issued assets not backed by any government, unlike fiat currency, and carry risks of terror funding and narcotics smuggling.
“RBI is against legalising crypto assets,” committee chairman Bhartruhari Mahtab told reporters after the hearing.
For exchanges like CoinDCX, CoinSwitch, and Binance’s Indian operations, the message reinforces that compliance and reporting obligations are likely to tighten well before any formal legalisation debate begins.
Is India’s Digital Rupee Gaining Ground?
RBI wants users to adopt the CBDC instead of privately issued stablecoins, which it says undermine monetary sovereignty. According to committee proceedings, the Digital Rupee has crossed 150 million transactions with a total value above Rs 34,000 crore since its 2022 pilot launch.
Adoption still lags UPI (Unified Payments Interface) by a wide margin. The e-rupee has roughly 10 million users, just 0.42% of India’s population, against UPI’s over 300 million daily transactions.
How Do Other Countries Regulate Crypto?
Global crypto policy splits into three broad camps, and RBI cited two of them directly. Qatar and China have banned cryptocurrency activity outright, while European regulators allow VDAs under strict compliance regimes instead of a blanket ban.
| Region | Approach | Note |
|---|---|---|
| China, Qatar | Full ban | Cited by RBI as precedent |
| Europe | Strict regulation | Licensing and compliance-heavy framework |
| India | Regulatory grey area | 30% tax, no dedicated law |
India’s current approach sits closest to taxation without regulation, which RBI’s testimony suggests it wants to shift toward tighter containment.
What’s Next
The Standing Committee on Finance held a closed-door session after the hearing to weigh RBI’s and ICAI’s inputs. A formal report on VDAs and the way forward could follow in the coming months. Will India follow China’s ban or Europe’s regulate-don’t-ban model?
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