RBI Revives Push to Isolate Banks from Crypto Exposure

The Reserve Bank of India (RBI) has renewed its push to isolate banks from crypto exposure, according to a report by The Economic Times.

RBI Deputy Governor Rohit Jain and Executive Director P. Vasudevan presented the central bank's position to the Parliamentary Standing Committee on Finance on Thursday.

The RBI reportedly recommended preventing the use of crypto in payments and settlements while restricting banking-sector exposure, echoing an approach it took in 2018 when it directed regulated financial institutions to stop dealing in crypto or providing services to individuals and businesses involved in them.

The RBI warned that applying traditional regulation to crypto could legitimize speculative assets and create a false perception of safety among users. It also urged policymakers to distinguish crypto from tokenized government securities, corporate bonds, and other regulated financial instruments so that restrictions would not hinder tokenization.