RBI Shocks Crypto Market Again – No Relief for Investors

On Friday, Sanjay Malhotra, the Governor of the Reserve Bank of India (RBI), stated that the central bank is worried about cryptocurrencies due to their potential to disrupt financial stability. During an interaction with reporters following the presentation of the second bi-monthly monetary policy review for the 2025-26 financial year, Malhotra was questioned about developments resulting from last month’s Supreme Court comment on cryptocurrencies.

He stated that there are no new developments in the crypto case. Malhotra stated, “It is being examined by a committee of the government. As you are aware, we are worried about crypto because it has the potential to disrupt financial stability and monetary policy.

This direction was given by the Supreme Court

Last month, the Supreme Court instructed the Centre to create a ‘clear’ policy for cryptocurrency regulation. The court had also emphasized its effect on the economy. A Supreme Court bench had classified bitcoin trading as illegal, similar to ‘hawala’ trading. At present, India is preparing a discussion paper on cryptocurrencies, and an inter-ministerial group (IMG) is examining global standards

. This group, which operates across various ministries, comprises representatives from the RBI, the market regulator Securities and Exchange Board of India (SEBI), and the Finance Ministry. Because there is currently no law governing cryptocurrency, it has not yet been made illegal in India.

Imposing tax does not mean legitimizing

This discussion paper aims to provide stakeholders with an opportunity to express their views before India finalizes its policy on cryptocurrency. In 2022, the government announced a 30% tax on profits earned from cryptocurrency transactions. However, taxing crypto-related income does not equate to legalizing it. Currently, crypto assets are not regulated under any specific legal framework in India.

Instead, they are being examined primarily through the lens of anti-money laundering laws. Additionally, income generated from trading in digital assets is subject to income tax and Tax Deducted at Source (TDS). The Goods and Services Tax (GST) also applies to cryptocurrency-related businesses. Notably, on March 4, 2021, the Supreme Court overturned an RBI circular issued on April 6, 2018, which had prohibited banks and RBI-regulated institutions from offering services related to virtual currencies.

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