India Unlikely To Enact New Crypto Law, Opting Instead For Partial Oversight

Authorities expect that mainstreaming digital assets could increase systemic risks, while effective regulation would be challenging in practice

India is unlikely to introduce new legislation to regulate cryptocurrencies and will reportedly maintain partial oversight.

According to a Reuters report that cited an official document, authorities expect that mainstreaming digital assets could increase systemic risks, while effective regulation would be challenging in practice, a concern repeatedly highlighted by the Reserve Bank of India (RBI).

The document highlights that granting legal recognition to cryptocurrencies through regulation may “cause the sector to become systemic,” whereas a full ban would not stop peer-to-peer transfers or decentralized exchange trades.

India’s Cautious Stance

India had previously drafted a bill to ban private cryptocurrencies in 2021, but never introduced it. Since then, the government has adopted a measured approach, advocating for global regulatory frameworks during its G20 presidency and postponing its own policy paper until after the U.S. enacted crypto legislation.

Currently, global crypto exchanges may operate in India after registering locally with agencies tasked with anti–money laundering checks. However, punitive taxes on gains and the RBI’s repeated warnings have curbed trading volumes.

Despite Indian investors holding an estimated $4.5 billion in crypto assets, the government believes usage remains limited and does not pose systemic risks.

The document also emphasizes the need to closely monitor stablecoins, particularly those tied to the U.S. dollar, following Washington's promotion of their wider use. While stablecoins aim to provide price stability, their widespread adoption could negatively impact India’s payment systems and potentially undermine the Unified Payments Interface (UPI), according to the report.

Crypto Check

Bitcoin was down 0.55% at $112,284.96, while Ethereum fell 0.81% at $4,321.18.

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