India's RBI Tightens Crypto Warning, Wants Banks Kept Away From Digital Assets

The Reserve Bank of India told a parliamentary panel it wants the formal banking system kept away from private digital assets. A full ban on cryptocurrencies remains an option the central bank is keeping open, the officials said.

The RBI has long argued that crypto poses risks to financial stability and monetary policy. Its latest push targets the links between banks and crypto exchanges, which rely on bank accounts to operate in the country. Lawmakers on the panel are reviewing a bill that would create a framework for a digital rupee while curbing private tokens.

The central bank's position is consistent with its earlier actions. In 2018, the RBI effectively banned banks from servicing crypto businesses, a restriction the Supreme Court struck down in 2020. Since then, banks have been slow to rebuild those ties. The current parliamentary push, if enacted, would codify a separation the RBI has sought for years.

The panel's deliberations occur alongside a broader global reassessment of crypto regulation. India has not yet finalized a legal framework for digital assets beyond taxation. The RBI's insistence on keeping banks at arm's length from crypto means exchanges operating in the country face continued uncertainty over their access to the financial system.