India’s central bank has once again endorsed a stricter approach to cryptocurrencies, while the country’s tax authorities say the growing use of offshore exchanges and self custody wallets is making enforcement increasingly difficult.
According to internal government documents reviewed by Reuters, the Reserve Bank of India continues to support a policy that leans toward restricting or prohibiting cryptocurrencies due to concerns over financial stability, monetary sovereignty, and the expanding role of privately issued stablecoins.
RBI Seeks to Keep Crypto Outside the Banking System
The documents indicate that the RBI wants banks and other regulated financial institutions to be barred from holding, trading, or maintaining any exposure to cryptocurrencies and privately issued stablecoins such as USDT and USDC.
The central bank believes that limiting the involvement of regulated financial institutions would help keep digital assets outside the formal financial system and reduce potential systemic risks.
Stablecoins remain a particular focus for policymakers. The RBI argues that stablecoins pegged to foreign currencies could weaken India’s monetary sovereignty, while rupee backed stablecoins may reduce government revenue generated through fiat currency issuance and pose additional risks to financial stability during periods of market stress.
Although the RBI continues to advocate a tougher stance, India has not imposed a complete ban on cryptocurrency trading. Instead, the industry operates within a regulatory gray area. While trading remains legal, most major banks have avoided direct involvement with digital assets after receiving repeated warnings from the central bank.
Tax Authorities Raise Compliance Concerns
India’s tax department has also expressed growing concerns about the difficulty of monitoring cryptocurrency activity.
Officials said transactions conducted through overseas exchanges, peer to peer rupee transfers, and privately controlled self custody wallets have made it significantly harder to track taxable activity.
According to the department, fewer than one quarter of the approximately 645,000 individuals who carried out cryptocurrency transactions in 2023 reported those activities on their tax returns.
India currently imposes a 30% tax on profits from cryptocurrency trading. However, officials say compliance remains challenging because of activity on foreign platforms, inconsistent asset valuations, and difficulties in determining ownership of digital assets.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic
