RBI Pushes India Towards Crypto Prohibition Amid Tracking Concerns

India's central bank has once again signaled its preference for a policy leaning towards prohibition on cryptocurrencies. The Reserve Bank of India (RBI) told a parliamentary panel that crypto assets pose a threat to the economy and should not be legalized, pushing for a containment strategy.

The tax department also warned that trading through offshore exchanges is difficult to track, and the government concedes it lacks a real-time monitoring system. This means even if India were to ban cryptocurrencies outright, it would not stop peer-to-peer transfers or activity on decentralized exchanges.

The RBI's three main arguments against crypto assets are that they are privately issued and outside central bank control, carrying risks of use in terror funding and narcotics smuggling; assets held by offshore entities are difficult to govern and challenge regulators; and stablecoins undermine national monetary sovereignty.