Here’s a sharper and more compact rewrite:
Indian regulators are maintaining a strict stance on cryptocurrencies, even as global governments and financial institutions accelerate their adoption of digital assets and blockchain innovation.
Despite rising global momentum around tokenization, stablecoins, and strategic crypto reserves, Indian authorities remain unconvinced and continue to resist change.
Documents reviewed by Reuters show the Reserve Bank of India (RBI) still supports a policy “leaning toward prohibition,” while tax officials warn of significant compliance shortfalls.
This position persists even with India’s large crypto user base—nearly 39 million investors holding about $2.1 billion in digital assets as of May.
The RBI has long argued that banks and financial institutions should be barred from engaging with cryptocurrencies or privately issued stablecoins, citing systemic risk concerns.
It has also opposed rupee-backed stablecoins, warning they could weaken monetary control and create instability during volatile periods.
CoinDesk has reached out to the RBI for comment.
Meanwhile, tax authorities are grappling with widespread underreporting. In the financial year ending March 2023, fewer than a quarter of the 645,000 crypto traders disclosed their gains.
Enforcement remains difficult, especially for transactions conducted on offshore exchanges and peer-to-peer platforms, particularly those settled in rupees.
Since the Supreme Court struck down the RBI’s 2018 banking ban, crypto has operated in a regulatory grey area—neither fully illegal nor clearly regulated. A 2021 proposal to ban private cryptocurrencies was never introduced, and policymaking has repeatedly stalled.
While the government has spoken about balancing innovation with risk control, recent internal documents suggest that key agencies are still reluctant to fully embrace digital assets.
India’s cautious approach is also driven by macroeconomic concerns. Heavy reliance on energy imports and persistent current account deficits leave the country exposed to external shocks. This vulnerability was evident when rising tensions with Iran drove up oil prices, increasing import costs and pushing the rupee to record lows.
Authorities fear that wider crypto adoption could accelerate capital outflows, bypass traditional financial systems, and further strain the country’s external position.
