Key Takeaways
- India is unlikely to pass full crypto regulation, citing systemic financial risks.
- The RBI warns regulation could legitimize crypto and embed it into the financial system.
- Stablecoins are flagged as a threat to national payment systems and monetary control.
- India leads global crypto adoption despite maintaining a cautious regulatory stance.
India is unlikely to introduce comprehensive legislation to regulate cryptocurrencies, choosing instead to maintain partial oversight due to concerns over systemic financial risks, according to a government document reviewed by Reuters.
The internal government document, dated September 2025, reveals the Reserve Bank of India’s (RBI) stance on cryptocurrencies, warning that regulating digital assets could grant them undue legitimacy and risk embedding them within the formal financial system, potentially exposing it to systemic vulnerabilities.
“Regulating cryptocurrencies may cause the sector to become systemic,” the document states, warning that formal oversight could Unintentionally legitimize a largely speculative asset class.
The document adds that a complete ban would still be ineffective in curbing peer-to-peer transactions or activity on decentralized exchanges. It also raises growing concerns around stablecoins, with Indian authorities warning that their Expansion could undermine the country’s rapidly evolving digital payments infrastructure.
“Stablecoins could fragment national payment systems and diminish monetary sovereignty,” the document notes, adding that despite their design to maintain price stability, they remain vulnerable to market volatility and liquidity pressures.
India Leads Global Crypto Adoption Despite Regulatory Caution
India’s cautious stance comes as a surprise, especially given its recent emergence as a global leader in cryptocurrency adoption. According to the 2025 Global Crypto Adoption Index, India, alongside the United States, tops the list of countries with the highest grassroots engagement in digital assets.
The study shows India ranking first across nearly all index parameters, including centralized service usage and decentralized finance activity, placing it ahead of both developed and emerging economies.
Furthermore, APAC led all regions in crypto activity, with the study showing a 69% annual surge in on-chain transaction volume, driven by countries like India, Vietnam, and Pakistan. Also, between July 2024 and June 2025, total transaction value in the region climbed from $1.4 trillion to $2.36 trillion, underscoring growing participation from both retail users and institutional players.
Read More: Another Central Asian Country Joins the Race With a Crypto Reserve; What’s Inside the Law
