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India's RBI wants banks walled off from crypto, CBDCs inside
The RBI wants banks walled off from crypto and stablecoins while pushing tokenized deposits and its e-rupee. The push carries weight beyond India's borders.
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The Reserve Bank of India wants a "calibrated containment strategy leaning towards prohibition" for crypto exposure in the banking system, while carving out space for tokenized deposits and its own digital rupee.
In a recent recommendation to a parliamentary panel, RBI officials urged lawmakers to keep banks and regulated financial institutions completely insulated from crypto assets and privately issued stablecoins. The central bank's preferred framework would prevent any bank exposure through payments, settlements, or balance sheets.
The Supreme Court struck down the RBI's 2018 circular that barred banks from servicing crypto firms back in March 2020. There has been no legislative ban since. The RBI is playing a differentiation game. Private crypto and stablecoins sit on one side of the line, deemed too risky for the formal banking system. On the other side: tokenized deposits issued by banks and the government's own Central Bank Digital Currency, the e-rupee, which the RBI views as the acceptable face of digital finance.