The Reserve Bank of India once again raised red flags over cryptocurrencies, warning that these digital assets could threaten the financial stability and monetary policy.Speaking to reporters after the central bank’s monetary policy announcement on Friday, RBI governor Sanjay Malhotra said, “There is no new development as far as crypto is concerned. A committee of the government is looking after this.”“Of course, as you are aware, we are concerned about crypto because that can hamper financial stability and monetary policy,” Malhotra said, quoted by PTI.His remarks follow the Supreme Court’s observation last month, where it urged the Centre to formulate a “clear cut” policy to govern cryptocurrency usage in India, citing its potential economic impact. A bench of the apex court even compared Bitcoin trading to “hawala” transactions, calling it an “illicit trade.” At present, cryptocurrencies remain unregulated in India, though not explicitly illegal. The government has been working on a discussion paper to seek stakeholders’ views before deciding its formal stance. An inter-ministerial group (IMG) comprising representatives from the RBI, market regulator Sebi, and the finance ministry is reportedly reviewing global practices.Despite the absence of a dedicated legal framework, crypto assets are subject to various taxes in India. The 2022 Union Budget introduced a flat 30% tax on profits from virtual digital assets, in addition to income tax, TDS, and GST levied on crypto exchanges. However, taxation does not equate to legal recognition of such assets.Notably, on March 4, 2021, the Supreme Court struck down an RBI circular issued on 6 April 2018, which had barred banks and regulated entities from offering services related to virtual currencies.
