RBI tells House panel crypto is hard to regulate

The Reserve Bank of India (RBI) has told a parliamentary panel that virtual digital assets (VDAs), including cryptocurrencies, are difficult to regulate and should not be legalized in India at this stage, The Press Trust of India reported, citing people aware of the matter.

The submission, which reinforces RBI’s long-running opposition to private crypto assets, was made before the Parliamentary Standing Committee on Finance, chaired by BJP member of Parliament Bhartruhari Mahtab, during a 2 July meeting on “A Study on Virtual Digital Assets (VDAs) and Way Forward.”

The committee heard representatives of the RBI and also held discussions with the Institute of Chartered Accountants of India (ICAI).

VDAs pose a threat to an emerging economy like India and should not be legalized at this stage, RBI reportedly told the panel, adding that digital assets could be used for illegal activities, including terror funding and narcotics smuggling.

The RBI also flagged the difficulty of monitoring offshore entities involved in crypto trading, arguing that cross-border platforms create serious challenges for regulators. After the meeting, Mahtab said the RBI remained against legalizing VDAs in India.

Comparing global approaches, the central bank reportedly told the panel that countries such as China and Qatar have banned such activity, while Europe has allowed virtual digital assets only under a stringent regulatory framework.

The ICAI reportedly took a different position. The accounting body supported a comprehensive VDA law and said it could help develop a principle-based approach to improve clarity for stakeholders and strengthen financial reporting and compliance, the report said, adding that it also said it could undertake research on the economic characteristics of VDAs and develop guidance on recognition, measurement, presentation and disclosure in financial statements.

The committee’s agenda shows Parliament has been examining VDAs over multiple sittings, including with the RBI, ICAI, the Ministry of Finance, the Ministry of Corporate Affairs, FIU-IND, CBDT, IFSCA and industry bodies.

India currently taxes gains from VDAs but has not created a full regulatory framework that gives crypto legal status as a financial product.