India is taking a cautious step back when it comes to crypto rules, choosing not to rush into creating legislation for the industry. The government will keep partial oversight without fully integrating crypto into the financial system.
According to Reuters, the RBI warned in a government document that crypto rules are difficult to enforce and could pose a threat to the financial system if digital assets become mainstream.
Why India is Holding Back
The RBI fears that official recognition could lead to the growth of crypto becoming too large and risky. At the same time, the government admits that a complete ban wouldn’t solve the problem either. Even with a ban, peer-to-peer transfers and trading on decentralized exchanges would continue.
Reuters reports, citing a government document, that India is unlikely to pursue comprehensive cryptocurrency legislation, choosing instead to retain its limited regulatory framework due to concerns over systemic risks. The document also warns that broad adoption of stablecoins…
— Wu Blockchain (@WuBlockchain) September 10, 2025
India has long been thinking about its strategy. In 2021, India imposed a crypto ban but subsequently withdrew it and then advocated for global regulation at the 2023 G20 summit. The government was going to release a discussion paper in 2024, but delayed it. They are sitting back to monitor how the United States regulates cryptocurrencies.
The Current Situation in India
Crypto exchanges worldwide can still operate in India. They will have to enroll in a local agency that discourages money laundering. Moreover, cryptocurrency profits are taxed heavily, and this discourages speculative trading.
Although these are stringent measures, Indians have so far spent approximately $4.5 billion in cryptocurrencies. The document notes that, although this is a significant amount, it is not yet substantial enough to pose a threat to the country’s financial stability.
🇮🇳 India Holds Back on Crypto Regulation 🚨
India is avoiding a full crypto framework, fearing it would legitimize digital assets and pose systemic risks.
🔸 RBI says regulation alone can’t contain risks
🔸 Ban limits speculation but won’t stop P2P/exchange trading
🔸 Crypto… pic.twitter.com/euZNGAxJkg
— Karan Singh Arora (@thisisksa) September 10, 2025
The Stablecoin Factor
The U.S. recently passed the GENIUS Act to regulate stablecoins backed by the dollar. India is closely monitoring them. The government fears widespread stablecoin use could harm India’s payment systems. This includes the popular Unified Payments Interface (UPI).
SHOCKING: India is not planning a full crypto law for now 🇮🇳
Reuters report says:
-> Govt says regulation would make crypto look official and too big to control
-> A ban won’t stop P2P or DEX trades
-> Stablecoins could hurt UPI and digital paymentsFor now, India will stick… pic.twitter.com/4VGWMbiuIw
— Sujal Jethwani (@SujalJethwani) September 10, 2025
The fact that India decided to postpone its crypto regulations indicates how complicated this matter is. India is waiting and watching global developments, especially in the United States. This cautious approach helps protect its financial system from risky moves.
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