India\u2019s central bank has reasserted a call for a cryptocurrency policy \u201cleaning towards prohibition,\u201d while the country\u2019s \u200ctax department warned that trading via offshore exchanges is hard to track, government documents reviewed by Reuters showed.<\/p>\n\n\n\n
The documents reveal a preference among key Indian agencies to use tighter curbs on virtual digital \u200bassets, even though the government has yet to adopt a policy to ban or regulate them.<\/p>\n\n\n\n
India has allowed cryptocurrencies to exist in a grey zone since a court in 2018 struck down \u200bReserve \u200bBank of India (RBI) policies that effectively banned them.<\/p>\n\n\n\n
A 2021 draft legislation to ban private cryptocurrencies was never introduced in Parliament, and a discussion paper on the matter has been deferred repeatedly. The government has delayed implementing a formal policy on virtual assets, saying any plan should balance innovation with risk management while \u2060protecting monetary sovereignty, financial stability and safeguarding against consumer losses.<\/p>\n\n\n\n
In September in internal discussions, India\u2019s finance ministry, after consultations with the RBI, backed limited regulatory clarity for virtual assets, arguing that existing tax and other laws had helped contain risks from the asset class, Reuters reported.<\/p>\n\n\n\n
The latest documents signal that key authorities are concerned about growing risks to the country\u2019s financial stability as cryptocurrencies continue to be traded without clear rules.<\/p>\n\n\n\n
India\u2019s finance ministry and the RBI did not respond to Reuters requests for comment.<\/p>\n\n\n\n
Cryptocurrencies have gained greater acceptance globally following policy changes \u200bin the U.S., where legislation \u200cbacking broader use of \u2060stablecoins has fuelled expectations of wider adoption.<\/p>\n\n\n\n
While \u2060countries like Japan and Singapore have moved to regulate cryptocurrencies, China has prohibited the use of such tokens.<\/p>\n\n\n\n
Despite India\u2019s policy ambiguity, the country has nearly 39 million crypto traders who held \u200babout $2.1 billion in digital assets at the end of May, according to estimates from the tax department.<\/p>\n\n\n\n
\u2018LEANING TOWARDS PROHIBITION\u2019<\/p>\n\n\n\n
The RBI, which \u200chas repeatedly warned about crypto-related risks, reasserted that policies \u201cleaning towards prohibition\u201d may be warranted.<\/p>\n\n\n\n
It said banks and financial institutions \u2060should be barred from holding, trading or gaining exposure to crypto assets and privately issued stablecoins to limit contagion risks, documents from May and June showed.<\/p>\n\n\n\n
At present, Indian banks are not prohibited from dealing in cryptocurrencies, but major lenders have avoided them following repeated warnings from the RBI.<\/p>\n\n\n\n
The central bank\u2019s inclination is towards prohibition to keep cryptocurrencies outside of the regulated financial system, a source familiar with the RBI\u2019s thinking said, requesting anonymity as they were not authorised to speak to the media.<\/p>\n\n\n\n
The RBI has warned against stablecoins as well.<\/p>\n\n\n\n
While stablecoins backed by foreign currencies pose a threat to domestic sovereignty, rupee-backed tokens could reduce the government\u2019s income from issuing its fiat currency and pose risks to financial stability during times of market stress, according to the RBI.<\/p>\n\n\n\n
Allowing stablecoins could also make cryptocurrency gains more difficult to detect and tax by reducing the need to convert holdings into fiat currencies. India imposes taxes on gains made from cryptocurrencies at 30%.<\/p>\n\n\n\n
MISREPORTING CRYPTO GAINS<\/p>\n\n\n\n
India\u2019s tax department has found instances of misreporting \u200cof cryptocurrency holdings in disclosures filed under income tax laws, according to the documents.<\/p>\n\n\n\n
The department\u2019s findings showed that \u2060fewer than a quarter of the 645,000 individuals who made cryptocurrency transactions in the financial year that ended in \u200bMarch 2023 reported them on their tax returns.<\/p>\n\n\n\n
Transactions routed through overseas exchanges and private wallets make it harder to identify beneficial owners and then recover taxes, while rupee-denominated, peer-to-peer trades make taxable income harder to track, the tax department said.<\/p>\n\n\n\n
Global crypto exchanges like Binance and Coinbase can operate in India after registering with a government agency.<\/p>\n\n\n\n
The tax department also warned that price \u200bvolatility and the absence of \u200cuniform valuation standards complicated the assessment of crypto assets for tax purposes.<\/p>\n\n\n\n
The documents showed that the Ministry of Corporate Affairs is examining \u2060accounting standards and other guidance for virtual digital assets.<\/p>\n","protected":false},"excerpt":{"rendered":"
India\u2019s central bank has reasserted a call for a cryptocurrency policy \u201cleaning towards prohibition,\u201d while the country\u2019s \u200ctax department warned that trading via offshore exchanges is hard to track, government documents reviewed by Reuters showed. The documents reveal a preference among key Indian agencies to use tighter curbs on virtual digital \u200bassets, even though the […]<\/p>\n","protected":false},"author":2,"featured_media":24910,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[2],"tags":[],"class_list":["post-24907","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"rttpg_featured_image_url":{"full":["https:\/\/cryptounplugged.ai\/blog\/wp-content\/uploads\/2026\/08\/Untitled-24.png",678,452,false],"landscape":["https:\/\/cryptounplugged.ai\/blog\/wp-content\/uploads\/2026\/08\/Untitled-24.png",678,452,false],"portraits":["https:\/\/cryptounplugged.ai\/blog\/wp-content\/uploads\/2026\/08\/Untitled-24.png",678,452,false],"thumbnail":["https:\/\/cryptounplugged.ai\/blog\/wp-content\/uploads\/2026\/08\/Untitled-24-150x150.png",150,150,true],"medium":["https:\/\/cryptounplugged.ai\/blog\/wp-content\/uploads\/2026\/08\/Untitled-24-300x200.png",300,200,true],"large":["https:\/\/cryptounplugged.ai\/blog\/wp-content\/uploads\/2026\/08\/Untitled-24.png",678,452,false],"1536x1536":["https:\/\/cryptounplugged.ai\/blog\/wp-content\/uploads\/2026\/08\/Untitled-24.png",678,452,false],"2048x2048":["https:\/\/cryptounplugged.ai\/blog\/wp-content\/uploads\/2026\/08\/Untitled-24.png",678,452,false],"post-thumbnail":["https:\/\/cryptounplugged.ai\/blog\/wp-content\/uploads\/2026\/08\/Untitled-24-678x420.png",678,420,true],"graptor-sq-xs":["https:\/\/cryptounplugged.ai\/blog\/wp-content\/uploads\/2026\/08\/Untitled-24-100x100.png",100,100,true]},"rttpg_author":{"display_name":"Admin CG","author_link":"https:\/\/cryptounplugged.ai\/blog\/author\/admin-cg\/"},"rttpg_comment":0,"rttpg_category":"news<\/a>","rttpg_excerpt":"India\u2019s central bank has reasserted a call for a cryptocurrency policy \u201cleaning towards prohibition,\u201d while the country\u2019s \u200ctax department warned that trading via offshore exchanges is hard to track, government documents reviewed by Reuters showed. The documents reveal a preference among key Indian agencies to use tighter curbs on virtual digital \u200bassets, even though the…","_links":{"self":[{"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/posts\/24907","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/comments?post=24907"}],"version-history":[{"count":1,"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/posts\/24907\/revisions"}],"predecessor-version":[{"id":24911,"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/posts\/24907\/revisions\/24911"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/media\/24910"}],"wp:attachment":[{"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/media?parent=24907"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/categories?post=24907"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cryptounplugged.ai\/blog\/wp-json\/wp\/v2\/tags?post=24907"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}