India Delays Crypto Rules as RBI Warns of Systemic Risks

- RBI cautions that regulating crypto could legitimize the industry and destabilize financial systems. - India faces a regulatory paradox: global leader in adoption, yet grappling with risks tied to decentralized systems. The Reserve Bank of India (RBI) warns that regulating cryptocurrencies could legitimize the industry while simultaneously introducing systemic risks to the country's financial stability. On September 10, 2025, Cointelegraph reported that this stance has consequently delayed the development of a comprehensive regulatory framework for digital assets. Also on September 10, Reuters reviewed a government document detailing the RBI's position. The document highlighted challenges in using regulation to contain cryptocurrency risks, particularly those from decentralized exchanges and peer-to-peer transactions. Furthermore, the RBI argued that while a ban might curb speculative risks, it would fail to address activities outside of centralized systems. India faces a regulatory paradox, as it is a global leader in cryptocurrency adoption yet grapples with skepticism from regulators. A 2025 Chainalysis report revealed that India ranks first in crypto adoption across all categories, which underscores widespread grassroots engagement. Despite this, financial authorities remain cautious, emphasizing the potential threats digital assets pose to macroeconomic stability. Currently, India lacks a unified regulatory framework, operating instead under a patchwork of measures. For instance, the country applies a 30% tax on gains from digital assets, and regulations mandate that foreign crypto exchanges register with the Financial Intelligence Unit (FIU). Major exchanges like Binance and KuCoin resumed operations in 2024 after obtaining FIU approval, following initial non-compliance. In addition, local crypto firms must adhere to Anti-Money Laundering (AML) requirements, signaling some degree of industry oversight.