Overview
- Internal government papers from May and June 2026 show the Reserve Bank of India favors a policy “leaning toward prohibition” and has recommended that banks and regulated firms be barred from holding, trading, or taking exposure to cryptocurrencies and privately issued stablecoins.
- The Income Tax Department says offshore exchanges, private wallets, and peer‑to‑peer rupee trades make transactions hard to trace and flagged an estimated 39 million holders with about $2.1 billion in assets while noting fewer than 25% of 645,000 FY2022–23 transactors declared activity.
- The RBI singled out stablecoins as a specific risk, saying foreign‑currency‑backed tokens could weaken monetary sovereignty and rupee‑pegged tokens could reduce seigniorage and create stress points in market turmoil.
- Enforcement steps are already rising: the Financial Intelligence Unit ordered exchanges to preserve over‑the‑counter records for transactions above $10,000 from January 2026 to help trace beneficial owners, funds and destination wallets.
- No new law has been passed so far, leaving investors in a legal grey zone that could push more activity offshore, raise tax and AML pressures, and force Parliament or regulators to choose between tighter bans and a formal regulated framework.