Some institutions whisper their intentions. The Reserve Bank of India (RBI) has spent the last 12 months saying the same thing at every microphone, in every official document, and before every parliamentary panel that would listen: private crypto does not belong inside India’s financial system.
While Washington writes stablecoins into law and Europe folds digital assets into the Markets in Crypto-Assets (MiCA) rulebook, Mint Street has chosen a different design. Call it a containment wall. Brick by brick, from the Financial Stability Report (FSR) of December 2025, published on the RBI’s official website, to its closed-door submissions before Parliament in July 2026, the RBI has built the most consistent anti-crypto position of any major central bank in the world. This is the full record of how that wall went up, told through the people who built it, the documents that cemented it, and the numbers that keep testing it.
The Governor Sets the Tone
The current chapter begins with Governor Sanjay Malhotra, who inherited the RBI’s crypto skepticism and made it his own. Over the past year, his public record on crypto, stablecoins and the Central Bank Digital Currency (CBDC) has been remarkably consistent, and it starts with a press conference that set the template for everything that followed.
June 2025: The First Line in the Sand
At the post-monetary policy press conference on June 6, 2025, days after the Supreme Court compared unregulated Bitcoin trade to hawala and demanded a clear policy from the Centre, Malhotra was asked where the central bank stood.
His answer left no room for doubt. Crypto, he said, “can hamper financial stability and monetary policy,” and a government committee was examining the matter, according to a report by Business Standard.
The remark signalled that the new Governor would hold the line his predecessor Shaktikanta Das had drawn. Das, remember, had openly advocated a ban and likened crypto to gambling.
The message did not stay confined to Mumbai for long. A few months later, Malhotra carried it to the biggest financial stage in the world.
October 2025: The Washington Pitch
Malhotra’s most revealing intervention came at the annual meeting of the International Monetary Fund (IMF) and the World Bank Group in Washington. In a discussion with the IMF’s Asia and Pacific Department, he urged central banks worldwide to promote CBDCs over stablecoins, warning that the cross-border benefits of a CBDC evaporate unless other countries adopt one too.
He conceded that stablecoins are one of the better forms of crypto with promise for asset tokenization, but said they fall short as a mainstay for monetary systems, flagging risks to monetary policy, capital account controls and money laundering. And he drew the line that defines India’s entire strategy: domestic payments are a solved problem thanks to the Unified Payments Interface (UPI), so the CBDC, in his words, “really is for cross-border payments.”
Back home, the doctrine hardened further through the winter.
November 2025: The Delhi School of Economics Doctrine
Speaking at the Delhi School of Economics (DSE), Malhotra repeated what has become the RBI’s mantra: the central bank keeps a “very cautious approach towards crypto,” and the final call rests with the government. Deputy Governor T. Rabi Sankar went further still. He has publicly called Bitcoin purely speculative, compared the phenomenon to tulip mania, and dismissed crypto tokens as essentially a piece of code.
Yet not every Malhotra remark has been a sales pitch for the sovereign alternative. One of his most quoted lines of the year was, in fact, an admission.
February 2026: A Candid Concession on the e-Rupee
After the RBI’s post-Budget board meeting, the Governor admitted the Digital Rupee (e₹) is “not a substitute for cash for now.” CBDC wallets remain unavailable on UPI giants PhonePe and Google Pay, and commercial banks have complied with RBI directives in form while showing little organic enthusiasm. It was a rare, honest acknowledgment that the sovereign token the RBI champions against crypto is still searching for everyday users.
If the Governor’s statements built the argument, the central bank’s flagship publication turned it into official doctrine.
December 31, 2025: The FSR Drops a Bombshell Chapter
If one document defines the RBI’s official position, it is the Financial Stability Report of December 2025, available on the RBI’s official portal. For the first time, it carried a dedicated special chapter titled “Financial Stability Implications of Stablecoins,” and the language was unusually blunt for a central bank publication.
What the RBI Actually Said
The report declared that central bank money “must remain the ultimate settlement asset” and the anchor of trust in the monetary system, and it urged countries worldwide to prioritise CBDCs over privately issued stablecoins, as reported. Behind that headline position sat a detailed risk assessment, which can be grouped into four fault lines.
The Risk Map: Four Fault Lines
The FSR flagged that the global stablecoin market had swelled to roughly $300 billion by the end of 2025, overwhelmingly dollar-pegged and concentrated among a handful of issuers. It warned of four things in particular:
- Fire-sale contagion. Issuers hold vast reserves of short-term government bonds. A redemption run could force distressed sales and amplify market volatility.
- De-pegging and confidence shocks. In the RBI’s telling, stablecoins have proven volatile and structurally fragile in their short history.
- Deposit flight and capital-control circumvention. Dollar-pegged tokens could quietly hollow out India’s controlled capital regime.
- Erosion of monetary sovereignty. The deepest fear, examined in a Forbes India analysis of the chapter, is that everyday Indian transactions could migrate to United States dollar (USD)-pegged stablecoins, especially now that America’s Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act has given the asset class legal legitimacy.
Having named the disease, the report also prescribed the cure.
The Prescription: e₹ Over Everything
The FSR’s remedy was sovereign digital money. CBDCs, the RBI argued, deliver the programmability, speed and instant settlement that stablecoins promise, without surrendering monetary control. The report positioned the Digital Rupee as the trusted, transparent alternative for India and for the world.
The FSR was rhetoric. What followed in the opening months of 2026 was regulation, and the market felt it immediately.
Early 2026: Tightening the Screws Beyond the Reports
Between January and May, the compliance perimeter around Indian crypto hardened on four separate fronts: money-laundering rules, tax reporting, policy strategy and the CBDC roadmap. Each move fits the same containment logic.
January 2026: AML and CFT Guidelines Refreshed
Updated anti-money laundering (AML) and countering the financing of terrorism (CFT) guidelines for the virtual digital asset (VDA) sector took effect, with 54 crypto service providers now registered with the Financial Intelligence Unit-India (FIU-IND).
The FIU-IND also directed exchanges to preserve records of over-the-counter (OTC) crypto transactions above $10,000 from January 2026 onward, scrutinising beneficial ownership, source of funds and destination wallets, according to reporting by The Economic Times.
The market response was visible on trading screens. Enforcement action against crypto remittance firms squeezed domestic Tether (USDT) supply and pushed India’s stablecoin premium above 8.5%. Two months later, the tax net widened as well.
March 2026: The CBDT Pulls Crypto and the CBDC Into Global Tax Reporting
Through a notification dated March 5, 2026, the Central Board of Direct Taxes (CBDT) formally brought crypto-assets, CBDCs and specified electronic money products under the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) framework, with retroactive effect from January 1, 2026. The message to holders of offshore digital assets was unmistakable: the reporting era has begun.
While enforcement moved forward, the one document that could have given the industry clarity moved backward.
April 2026: The Discussion Paper Dies, Again
India’s long-promised crypto policy discussion paper, drafted by a working group under the Department of Economic Affairs (DEA) and promised since July 2024, was shelved for at least the fifth time, Moneycontrol reported in an exclusive, naming the RBI’s persistent opposition as the main reason.
The central bank’s specific fear that dollar stablecoins could undermine UPI kept the paper locked in a drawer. It was perhaps the most consequential non-event of the year, and it landed in the same month the RBI went on the front foot for its own token.
April 2026: “Embrace the Future of Money”
Under the RBI Kehta Hai consumer-awareness banner, the central bank urged citizens through its official awareness portal and social handles to download their pilot bank’s Digital Rupee app and join the CBDC experiment, highlighting UPI QR interoperability, wallet-based payments and zero-cost merchant settlement.
The push followed real-world welfare deployments: a programmable-CBDC Public Distribution System (PDS) pilot in Gujarat in February 2026, where digital rupees can only be redeemed at Fair Price Shops, and a food-subsidy pilot in Puducherry under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) with Canara Bank and the Public Financial Management System (PFMS). By the end of May, the central bank had put the entire CBDC strategy in writing.
May 29, 2026: The Annual Report Charts the Road Ahead
The RBI’s Annual Report 2025-26 laid out the next phase: bilateral and multilateral cross-border CBDC pilots in 2026-27, a new CBDC and Asset Tokenisation Sandbox, expanded direct benefit transfer (DBT) use cases, and continued work on the Unified Markets Interface (UMI) for tokenised financial assets settled in wholesale CBDC, as reported by Business Standard.
The report also disclosed a digital assets pact with the Monetary Authority of Singapore (MAS) and pilot discussions with the United Arab Emirates (UAE), alongside multilateral projects led by the Bank for International Settlements (BIS), first reported by Reuters. One sobering figure sat buried in the numbers: retail e-rupee in circulation actually fell to Rs 7.71 billion as of March 31, 2026, from Rs 10.16 billion a year earlier. The sovereign token is still fighting for everyday relevance against UPI.
All of this was a prelude. The real confrontation arrived in July, inside a committee room in Parliament.
July 2026: The Parliamentary Showdown
Over one week in early July, the RBI’s decade of caution crystallised into something close to a formal demand for prohibition, delivered across three closely watched moments.
July 2: The RBI Testifies
On July 2, 2026, RBI Deputy Governor Rohit Jain and Executive Director P. Vasudevan appeared before the Parliamentary Standing Committee on Finance, chaired by Bharatiya Janata Party (BJP) MP Bhartruhari Mahtab, for the panel’s study titled “A Study on Virtual Digital Assets (VDAs) and Way Forward.”
The central bank’s background note, first reported by The Economic Times, pitched what officials called a containment strategy built on four planks: prohibition remains a recognised policy option under international frameworks; banks and regulated financial institutions should be insulated from crypto and privately issued stablecoins entirely; crypto should be barred from payments and settlements; and regulating crypto under conventional financial rules could legitimise speculative assets and lull retail investors into a false sense of security.
There was, however, one carve-out in the note that deserves more attention than it received.
The Tokenization Carve-Out
The RBI explicitly asked lawmakers to distinguish crypto from tokenised government securities and corporate bonds, so that restrictions built for speculative tokens do not strangle regulated tokenization.
The central bank even questioned the methodology behind Chainalysis’ 2025 Global Crypto Adoption Index, the ranking that puts India first in the world. The distinction matters: the RBI is not against blockchain; it is against private money. The next morning, the verdict on the latter became public.
July 3: “A Threat to an Emerging Economy”
The RBI told the panel that VDAs pose a threat to an emerging economy like India, should not be legalised at this stage, could fuel terror funding and narcotics smuggling, and that offshore crypto entities are near-impossible to monitor, according to a report by Business Today.
Committee chairman Mahtab confirmed to reporters that the RBI remains opposed to legalising VDAs, while the Institute of Chartered Accountants of India (ICAI), heard the same day, backed a comprehensive legal framework instead. Five days later came the sharpest turn of all.
July 8: Reuters Confirms the RBI Backs a Ban
On July 8, 2026, Reuters, citing internal government documents, revealed that the RBI has formally thrown its weight behind banning private cryptocurrencies in its latest views to the Union government. The Income Tax (IT) Department, working under the CBDT, separately flagged serious evasion risks from peer-to-peer (P2P) transfers and offshore platforms.
The documents confirmed the tax department’s estimate of over 39 million Indian crypto investors holding roughly $2.1 billion in digital assets as of end-May 2026, with fewer than 25% of past traders reporting transactions on their returns, as covered by The Tribune.
Those 39 million investors are exactly why the RBI’s wall, however solid, keeps meeting resistance.
The Numbers the RBI Cannot Ignore
For all its resolve, the central bank is regulating against powerful currents. An estimated 72.7% of India’s crypto trading volume has already moved offshore, Member of Parliament (MP) Raghav Chadha told Parliament during the financial year (FY) 2026-27 Budget debates, and more than 180 Indian crypto startups have relocated abroad.
The Digital Rupee, meanwhile, has crossed 150 million transactions worth over Rs 34,000 crore since its December 2022 launch, yet counts only around 10 million users, roughly 0.42% of India’s population.
Even Chairman Mahtab has conceded the e-rupee is not flourishing against private digital assets, and the Governor’s own admission that it is no cash substitute yet only underlines the gap.
Add to this the fact that India tops the Chainalysis 2025 Global Crypto Adoption Index, the very ranking the RBI disputes, and the tension between policy and behaviour becomes impossible to miss.
That tension now heads toward a resolution, with two dates circled on every policy watcher’s calendar.
What Happens Next
The first date is July 15, 2026, when the Standing Committee hears the Department of Economic Affairs, the last scheduled evidence before it locks in its recommendations. The panel has already heard CoinDCX, Coinbase, CoinSwitch, Binance, WazirX, ZebPay, the FIU-IND, and the ICAI.
The second is the Monsoon Session of Parliament, when the committee’s report is expected to be tabled. It could recommend a comprehensive framework, a stricter prohibition, or something in between. What it cannot recommend is the status quo: a $2.1 billion market, 39 million investors, a 30% flat tax under Section 115BBH of the Income Tax Act, a 1% tax deducted at source (TDS), and no law that says what any of it legally is.
The Bottom Line
The RBI’s position has not moved an inch in over a decade. From the 2018 banking circular the Supreme Court struck down in 2020, to Governor Malhotra’s Washington pitch for CBDCs, to the December 2025 FSR’s stablecoin chapter, to the July 2026 parliamentary submissions backing prohibition, the message has stayed the same.
What has changed is the sophistication of the strategy: contain private crypto, champion the sovereign e₹, protect tokenization, and let taxation and AML enforcement do the day-to-day policing.
Whether Parliament ultimately sides with Mint Street’s wall or the market’s tide, one thing is now on the official record beyond dispute. The Reserve Bank of India has made its choice. The question left is whether India makes the same one.
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