India supports blockchain technology while taking a cautious approach toward cryptocurrencies, Reserve Bank of India Governor Sanjay Malhotra said on Oct. 3. Speaking at the Kautilya Economic Conclave in New Delhi, he cited concerns about control over the national currency, monetary policy and cross-border capital flows. His remarks separated private crypto assets from the technology behind them.
RBI Supports Blockchain and Tokenisation
Malhotra said the RBI encourages work on distributed ledger technology and tokenisation. Distributed ledgers allow participants to share transaction records, while tokenisation represents money or assets digitally. Financial institutions can use these tools without adopting privately issued cryptocurrencies.
“Our approach has been to promote the underlying technologies,” Malhotra said. He added that the central bank uses some of these technologies internally and through partnerships involving public and private organizations.
His comments focused on how financial institutions use technology, rather than treating all digital assets as the same product. Support for shared transaction records and digital representations of assets does not mean the RBI has endorsed cryptocurrencies as money.
In his broader address, Malhotra discussed artificial intelligence, tokenisation and new forms of financial services. He said these developments could improve efficiency, but financial innovation must preserve trust. He identified sound institutions, final settlement of transactions and financial integrity among the conditions needed to sustain that trust.
Crypto Concerns Centre on Money and Capital Flows
The RBI governor linked its caution toward cryptocurrencies to the ‘singleness of money.’ This principle means different forms of money denominated in the same currency should exchange at equal value. For example, a rupee held in a bank account should have the same value as a rupee in cash.
Malhotra pointed to concerns about monetary policy and restrictions on money moving across borders. He said these questions matter particularly for emerging economies that maintain controls on capital flows. His remarks addressed the possible risks of crypto adoption rather than announcing a new prohibition.
“But insofar as crypto is concerned, it has been a cautious approach,” he said. The statement reaffirmed the RBI’s position while keeping its support for financial technology separate from its assessment of private digital currencies.
The distinction shaped his response to arguments about using cryptocurrencies for payments. Malhotra said domestic transfers in India and many other countries are already fast, inexpensive and convenient. He therefore questioned whether domestic payments represent the main problem such assets need to solve.
Cross-Border Payments Remain a Priority
Instead, Malhotra identified cross-border payments as a more pressing challenge. Sending money between countries involves different currencies, payment networks and regulatory requirements. He said policymakers could explore central bank digital currencies as one way to address difficulties in these transactions.
India has been developing and testing its digital rupee, a central bank digital currency. Unlike a privately issued crypto asset, it represents money issued by the RBI. The project forms part of the central bank’s work on digital payment technology.
Malhotra presented central bank digital currencies as an option for improving international payments. His comments did not set out a new payment program or identify countries that would participate in such an arrangement. He did not announce a launch date for a new cross-border service or a timetable for changing India’s crypto policy at the conclave.
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