The Reserve Bank of India (RBI), the country’s national bank, has discussed the future of virtual digital assets, indicating a strong regulation or total ban of cryptocurrencies in the world’s second largest Internet market. RBI has expressed concerns about the destabilising effect of cryptos on the monetary and fiscal stability of India, recommending framing of legislation in the field.

However, any legislation for regulation or banning of crypto involves a close international collaboration, as cryptocurrencies are, by definition, borderless instruments. The Financial Stability Board (FSB), a body comprising of regulators, treasury officials, and central bankers from the G20 economies, including India, is considering a proposal of robust global rules for crypto in an upcoming meeting established for October 2022. The FSB argued that crypto assets were predominantly used for speculative purposes and did not operate under a regulation-free space.

Furthermore, India already proposed a 30% tax on crypto and NFTs incomes in February 2022, giving bankers, traders, and financial institutions mixed feelings regarding its onboarding with crypto assets. As a response to the Federal Bank’s changing attitude towards crypto, Coinbase halted its trading services in India, earlier in 2022, stating informal pressure from the RBI. Local exchanges and other crypto companies have also experienced strong declines in trading volumes since 2022, which increases speculation on RBI’s future regulatory measures for crypto.