The Reserve Bank of India has formally advised against the legalisation of cryptocurrency, warning that virtual digital assets pose significant threats to the financial stability of emerging economies like India.
The central bank delivered this position to the Parliamentary Standing Committee on Finance, chaired by Bhartruhari Mahtab, during a hearing on Thursday.
In its submission, the RBI highlighted that several nations, including China and Qatar, have opted to ban such financial activities entirely, while European jurisdictions have adopted more permissive frameworks.
The central bank's argument rests on the premise that the unregulated nature of crypto markets introduces systemic risks that developing financial systems are ill-equipped to manage.
This intervention underscores the persistent regulatory friction between India's monetary authority and the growing domestic crypto community.
While the government has previously imposed strict tax regimes on crypto transactions, the RBI's explicit recommendation against legalisation signals a continued preference for containment over integration.