India is unlikely to introduce a full regulatory framework for cryptocurrencies, according to recent reporting by Reuters. Authorities fear formal regulation would legitimize digital assets and increase systemic risks rather than contain them.
India Holds Back on Crypto Regulation Amid Systemic Risk Concerns
12 September 2025 - 07:40 CEST
Balanced regulation
The Reserve Bank of India (RBI) has reportedly argued that managing risks through regulation would be difficult and that giving cryptocurrencies legal recognition could fuel speculation. A complete ban, however, might curb speculative excess without stopping peer-to-peer transfers or decentralized trading.
India drafted a bill in 2021 to ban private cryptocurrencies but it was not enacted. Instead, the government has imposed heavy taxes on crypto gains and requires international exchanges to register locally under anti-money laundering rules.
Stablecoin concerns
According to a government document seen by Reuters, the report estimated Indian households hold about $4.5 billion in crypto assets, not enough, the RBI judged, to pose a systemic threat. Officials also flagged risks from stablecoins after the US legalised dollar-backed tokens in July, warning they could fragment India’s payments ecosystem, including the Unified Payments Interface (UPI).
Public interest
A survey by Indian exchange Mudrex found 93% of respondents support crypto regulation, with most saying they would invest more under clearer rules and lighter taxes.
India also topped Chainalysis’s 2025 Global Crypto Adoption Index, underscoring the tension between high adoption and a cautious policy stance.
