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FollowingThe Central Bank of India promotes cryptocurrency ban, policy review becomes stricter
The Central Bank of India is pushing cryptocurrency policy towards ban, restoring the country\'s most stringent policy stance on private digital assets. Currently, officials are reviewing the next phase of measures to regulate virtual digital assets.
The Reserve Bank of India wants to ban banks and regulated financial institutions from holding, trading or contacting cryptoassets and private stablecoins. The central bank\'s stance is based on financial stability, monetary sovereignty and concerns that privately issued digital assets may weaken control over payment flows and capital flows.
The latest move came after the Indian Ministry of Finance launched work on virtual digital assets. The committee held the seventh virtual digital assets conference with representatives of the Reserve Bank of India and the Institute of Chartered Accountants of India, bringing legal status, accounting treatment, taxation and investor protection into the same policy review framework.
Tax authorities focus on offshore tax evasion
The position of the Reserve Bank of India is not the only pressure point in the policy document. India\'s tax authority has warned that cryptocurrency transactions conducted through overseas exchanges make enforcement more difficult and bypass domestic reporting channels and tax systems.
India has taxed virtual digital assets but has not given them legal tender status. Income from virtual digital assets is taxed at 30%, and eligible transfers are also subject to a source tax deduction of 1%. This tax structure establishes a reporting tracking mechanism for domestic activities, but overseas transactions and wallet-based transfers remain difficult to regulate.
According to Reuters data, Indian cryptocurrency participants are close to 39 million traders, holding approximately US$2.1 billion in digital assets. Of the 645,000 traders in fiscal 2023, less than 25% reported these holdings on tax returns, reinforcing the enforcement argument against offshore platforms and unreported earnings.
stablecoins remain the focus of attention
Private stablecoins are at the heart of the Reserve Bank of India\'s attention because they can transfer value pegged to the dollar across borders outside the traditional banking system. The central bank has repeatedly warned that stablecoins may pose monetary policy and capital flow risks, especially in markets with strict foreign exchange controls.
Indian law enforcement agencies have taken action against cryptocurrency-related transfer channels. Enforcement has searched companies in Bangalore in connection with an alleged US$265 million cryptocurrency-related transfer investigation that focuses on foreign exchange violations related to deposit and withdrawal services.
The policy path remains distant from the formulation of formal laws. India drafted a bill to ban private cryptocurrencies in 2021, but never submitted it. The current review is still discussing prohibitions, bank controls, tax enforcement and accounting standards, while the Department of Corporate Affairs is studying how digital assets should be treated in corporate accounts.
