The Reserve Bank of India (RBI) has once again reaffirmed its preference for a crypto ban. Internal documents from May and June 2026 confirm this stance. At the same time, India's tax authority warns of massive tax evasion through offshore exchanges. This concerns roughly 39 million crypto investors in the country.
The RBI is India's central bank and oversees monetary policy as well as banking supervision. For years it has taken a restrictive stance toward crypto assets, worried about contagion risks for the regulated banking system. In 2018, an RBI circular barred banks from any dealings with virtual currencies. However, the Supreme Court overturned this ban in 2020 as disproportionate. Since then, the market has operated in a regulatory grey zone without a dedicated law. The documents that have now come to light show a clear message. Nothing has changed about the central bank's preference for a ban. Roughly 39 million Indians held crypto assets worth about USD 2.1 billion as of the end of May 2026. That figure comes from the tax authority's estimate. Of 645,000 people with crypto transactions in the tax year through March 2023, fewer than a quarter declared them.
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RBI wants to fully exclude banks from crypto business
In the documents from May and June 2026, the RBI describes its own stance. It calls this a policy that "leans toward a ban." Specifically, the central bank wants banks and financial institutions fully barred from crypto assets and privately issued stablecoins. This exclusion would cover holding, trading and any exposure. Through this, it aims to limit contagion risks for the regulated financial system. Such a rule would therefore go considerably further than the current situation.
Formally, Indian banks are currently not excluded from crypto business. However, most institutions avoid the segment anyway, after the central bank repeatedly warned of the risks. Yet no law exists that makes the required separation binding. Meanwhile, the Ministry of Corporate Affairs is reviewing accounting standards for virtual digital assets. This points to some regulatory movement.
Notably, the RBI's skepticism targets private crypto assets, not digital money as such. Since 2022, the central bank has itself operated a central bank digital currency, the e-rupee, and actively pushes its adoption. Neither the finance ministry nor the RBI responded to Reuters' inquiries about the documents.
Tax authority sees billions in untaxed crypto gains
India's tax authority also raises a concern of its own. In internal notes, it warns that trading through offshore exchanges and private wallets is barely traceable. Moreover, rupee-denominated peer-to-peer trades complicate the attribution of taxable income, because they take place outside the regulated venues.
The scale is considerable overall. Roughly 39 million Indians held crypto assets worth about USD 2.1 billion as of the end of May 2026. The authority itself provides that estimate. The compliance gap becomes even clearer in an older data point. Roughly 645,000 people made crypto transactions in the tax year through March 2023. Of those, fewer than a quarter declared them on their tax returns.
Global exchanges such as Binance and Coinbase do operate legally in India, provided they register with the Financial Intelligence Unit. Tracking therefore fails less because of the large platforms. The workaround routes via foreign providers and direct trades between private individuals cause the problem.
India's crypto policy wavers between ban and regulation
The RBI's tougher line contradicts the finance ministry's position. In September 2025, however, the ministry came out internally for "limited regulatory clarity" rather than a ban. That position followed consultations with the central bank. Existing tax and other laws had already largely contained the risks of the asset class. That was the reasoning at the time.
This disagreement has shaped India's crypto policy for years. A 2021 draft law meant to ban private cryptocurrencies never reached parliament. Moreover, the government repeatedly postponed a long-announced discussion paper on crypto regulation, most recently in April 2026. Between the restrictive central bank and the more pragmatic ministry, neither side has therefore prevailed so far. Ultimately, the central question remains open: whether India wants to ban, regulate or leave crypto assets in today's limbo.
Since the 2018 RBI banking ban, a clear crypto rule is missing
Today's grey zone has a concrete origin. In April 2018, the RBI originally barred all regulated banks from trading virtual currencies via a circular. The circular also prohibited them from providing services to crypto firms, officially justified by money laundering and terrorism financing risks. In March 2020, however, the Supreme Court overturned this order in the IAMAI versus RBI case. The court found the ban disproportionate. Crypto assets had caused banks no demonstrable harm, and milder measures would have been available.
Without a dedicated crypto law, India nevertheless applies harsh taxation. Since the 2022 union budget, a flat 30% tax applies to gains from virtual digital assets. Offsetting losses between different crypto assets or against other income types is excluded here. In addition, a 1% withholding tax on crypto transactions has applied since 1 July 2022. Both rules remain unchanged for 2026/2027.
The risks cited by the RBI are not theoretical. In July 2024, attackers stole roughly USD 234.9 million from the exchange WazirX. A year later, hackers hit CoinDCX, India's largest platform, for about USD 44 million. Both cases ultimately underscore the security problems on which the central bank bases its argument.
Internationally, crypto regulation is moving past India
While India hesitates, other jurisdictions have long created facts on the ground. In the EU, the MiCA regulation has applied in full since early 2025. It creates a uniform rulebook for crypto assets in the single market. In the US, moreover, the GENIUS Act took effect in July 2025. It created the first federal framework for payment stablecoins with a 1:1 reserve requirement.
At the same time, even restrictive approaches elsewhere are more clearly defined. China maintains a comprehensive crypto ban, while Japan and Singapore have established their own regulatory frameworks. India, by contrast, remains without a binding line despite 39 million investors. As a result, the country risks leaving its growing crypto base permanently in a legal grey zone. It fails to steer that base into orderly channels.
