India's central bank is intensifying its push for a total prohibition on cryptocurrencies. The Reserve Bank of India's stance could directly impact nearly 39 million traders holding an estimated $2.1 billion in digital assets.
The RBI previously attempted a banking ban in 2018, which the Supreme Court overturned in 2021. Since then, crypto trading has operated under a punitive 30% tax on gains and a 1% tax on every transaction.
Enforcement remains a major challenge. Less than 25% of crypto traders filed accurate taxes last year. Offshore platforms allow traders to bypass domestic regulators, complicating tax collection and enabling risks like money laundering.
Despite regulatory hostility, India ranks first globally in crypto adoption, creating a stark paradox for policymakers. The RBI's push to ban private stablecoins is seen as a move to eliminate competition for its own digital rupee project.
Any new prohibition would likely face immediate legal challenges, given the Supreme Court's prior ruling against a similar ban. The market remains in a regulatory gray zone, lacking a clear framework that addresses investor concerns.