India’s central bank has restated its cautious position on cryptocurrencies even as it continues to support tokenization, distributed ledger technology and central bank digital currency initiatives. RBI Governor Sanjay Malhotra said the bank remains wary of crypto because of possible risks to monetary sovereignty, monetary policy and capital flows.

At the same time, the Reserve Bank of India is moving ahead with regulated digital finance projects that keep settlement tied to sovereign money. Those efforts include pilots involving tokenized certificates of deposit and corporate bonds, with settlement through the wholesale digital rupee.

Why the RBI remains cautious on crypto

Malhotra said the RBI’s concern is not with technology itself, but with the effect that private digital assets could have on the monetary system. A central issue is what the bank describes as the “singleness of money,” meaning that money used across the economy should remain uniform in value, backing and settlement.

The RBI’s position is that privately issued digital assets could weaken that unified structure if they operate on terms that differ from sovereign money. In that view, financial innovation must not compromise settlement finality, financial integrity or monetary sovereignty.

Support for tokenization and DLT continues

While maintaining that caution on cryptocurrencies, the RBI is still encouraging financial uses of blockchain-related infrastructure within a regulated framework. Malhotra said tokenization and artificial intelligence can improve efficiency, provided they are deployed with safeguards that preserve the role of central bank money.

That approach is reflected in ongoing pilots that connect tokenized financial instruments to central bank settlement. The projects cited include tokenized certificates of deposit and tokenized corporate bonds, settled using the wholesale CBDC rather than private crypto assets.

Payments use case seen differently at home and abroad

The RBI also questioned the case for private cryptocurrencies as a solution for domestic payments. Its view is that India already has fast and low-cost payment infrastructure, reducing the need for a separate private crypto-based network for local transactions.

By contrast, cross-border payments and international transfers were identified as a stronger area for digital currency innovation. In that context, CBDCs are being presented as a more relevant tool than private cryptocurrencies.

Compliance rules remain in force

India has not yet introduced a comprehensive crypto law, but enforcement around the sector has continued through existing rules. Crypto platforms are required to register with the Financial Intelligence Unit-India under anti-money laundering requirements.

Those compliance efforts have also extended to offshore providers serving Indian users. For now, the country’s active framework continues to rely on tax measures and AML obligations rather than a single dedicated crypto statute.

What comes next

The clearest confirmed next step is the expansion of regulated tokenization and wholesale CBDC testing, particularly where tokenized securities can be settled in central bank money. That suggests the RBI is separating support for digital financial infrastructure from acceptance of private cryptocurrencies.

Unless policy changes are announced, India’s stance remains two-track: continued caution on crypto markets alongside further experimentation with tokenization, DLT and digital rupee-based settlement systems.

Source: crypto.news