RBI Urges India Not to Legalise Cryptocurrencies, Flags Security and Financial Risks

The Reserve Bank of India (RBI) has reiterated its opposition to legalising virtual digital assets (VDAs), including cryptocurrencies , warning that they pose risks to India's financial stability, economic security, and regulatory framework .

The RBI presented its views during a meeting of the Parliamentary Standing Committee on Finance , chaired by BJP MP Bhartruhari Mahtab , which discussed "A Study on Virtual Digital Assets (VDAs) and Way Forward." Representatives of the Institute of Chartered Accountants of India (ICAI) also attended the meeting.

According to sources, the RBI told the panel that cryptocurrencies are unsuitable for an emerging economy like India and should not be legalised at this stage . The central bank warned that their growing use could weaken financial stability, reduce regulatory oversight, and complicate economic management.

The RBI also highlighted concerns that cryptocurrencies could be misused for terror financing, money laundering, and narcotics trafficking . It noted that crypto transactions involving offshore entities are difficult to monitor, posing significant challenges for regulators.

During the discussions, the RBI cited China and Qatar , which have banned cryptocurrency-related activities, while noting that several European countries permit VDAs only under strict regulatory frameworks .

After the meeting, Mahtab said the RBI remains against legalising cryptocurrencies in India. He added that while certain aspects of VDAs are covered under the Income Tax Act , the broader regulatory framework is still under review.

The ICAI supported the introduction of a comprehensive law for VDAs and offered to help develop accounting, auditing, and financial reporting standards to improve transparency and compliance in the digital asset ecosystem.