The Reserve Bank of India has reiterated a sharply critical stance on private cryptocurrencies, arguing that they are neither money nor genuine financial assets but merely strings of computer code without intrinsic value. RBI Deputy Governor T. Rabi Sankar recently remarked that popular crypto tokens do not satisfy core monetary functions and therefore cannot be treated as currency in any meaningful legal or economic sense.
RBI questions crypto’s value and status
Sankar is reported to have said that cryptocurrencies lack underlying assets, sovereign backing, or any enforceable promise of payment, and that their prices are driven purely by speculative sentiment. In his view, this makes them unsuitable as a store of value, unit of account, or medium of exchange, the three classic benchmarks for something to qualify as money.
The RBI’s position fits within years of cautionary messaging, where the central bank has repeatedly highlighted financial, consumer-protection, and stability risks from unregulated digital tokens. Regulators see particular dangers in volatility, fraud, and the potential for misuse in money laundering and other illicit activities.
Legal status and taxation in India
In India, cryptocurrencies remain outside any dedicated regulatory framework, meaning they are not recognised as legal tender and are not treated as regulated financial products. However, trading and holding crypto are not outright banned, so individuals can still buy, sell, and transact in such tokens at their own risk.
The government has chosen to impose heavy taxation on crypto-related transactions, including high rates on gains, as a way to discourage widespread use without declaring the activity illegal. Commerce Minister Piyush Goyal has similarly stated that private cryptocurrencies are not supported by the government because they are not backed by any real asset or sovereign guarantee.
CBDC push and global context
Both the government and the RBI are instead promoting a central bank digital currency (CBDC), a sovereign-backed digital rupee aimed at providing a safer, more efficient alternative for digital payments. RBI began pilot trials of its CBDC about three years ago, following the example of other jurisdictions that have launched or tested central bank digital currencies.
The article notes that scams and frauds linked to the crypto sector have risen in recent years, reinforcing regulatory scepticism in India even as some international developments move in the opposite direction. It mentions, for instance, that in the United States, President Donald Trump signed an executive order to treat Bitcoin as part of a reserve framework, signalling a more accommodative approach in that market.
