RBI Opposes Crypto Legalization While ICAI Calls for a Clear Legal Framework for Digital Assets in India
India’s central bank has once again made its position on cryptocurrencies clear. The RBI has told the Parliamentary Standing Committee on Finance that crypto legalization in India should not happen at this stage. According to the central bank, Virtual Digital Assets (VDAs) could create serious risks for the country’s economy and financial system.
The committee held a meeting to discuss the future of Virtual Digital Assets in India. During the discussion, RBI officials said cryptocurrencies are still difficult to regulate. Many crypto transactions happen through foreign exchanges and offshore companies. This makes it hard for Indian authorities to track the flow of money or take action when rules are broken.
The RBI also raised concerns about illegal activities linked to cryptocurrencies. The central bank said digital assets can be used for terror funding, money laundering, and drug trafficking. Since many transactions are difficult to trace, regulators face major challenges in stopping such activities. The RBI believes these risks make cryptocurrency regulation much more complicated.
Committee chairman Bhartruhari Mahtab said after the meeting that the RBI clearly opposed the legalization of crypto in India. He added that the committee also reviewed the current tax rules for digital assets as it discussed possible policy changes. The meeting focused on understanding both the risks and the future of the crypto sector.
Global Examples and India’s Cautious Approach
The RBI also shared examples from other countries. It pointed out that China and Qatar have banned cryptocurrency activities. At the same time, several European countries allow crypto only under strict rules. The central bank said these examples show that digital assets need strong regulation before they can become part of the financial system.
How this Could Shape India’s Crypto Rules
The RBI’s latest stand shows that protecting financial stability remains its top priority. The discussion could influence future government decisions on crypto laws and regulations.
The Institute of Chartered Accountants of India (ICAI) shared a different view during the meeting. The institute supported a proper legal framework for Virtual Digital Assets instead of leaving the sector without clear rules. ICAI said better accounting and reporting standards would improve transparency and help businesses, investors, and regulators.
ICAI Pushes for a Clear Legal Framework
The institute also offered to prepare detailed accounting guidance for different types of digital assets. It believes clear rules would improve compliance and make financial reporting more reliable.
India already taxes cryptocurrency under the Virtual Digital Assets category. Investors pay a 30% tax on profits and a 1% TDS on every transfer. Even with these taxes, cryptocurrencies are not legal tender in India. The RBI’s latest statement also does not change existing laws. Any decision on crypto legalisation in India will depend on Parliament and the government.
For now, India’s approach remains cautious. The RBI seeks to protect the country’s economy from potential risks, while the ICAI believes that clear rules can improve oversight. The discussion shows that India’s crypto policy is still evolving, and further debate is likely before any major decision is made.
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