Reserve Bank of India (RBI) Governor Sanjay Malhotra has reiterated the central bank’s cautious stance toward private crypto assets. Speaking at the Kautilya Economic Conclave in New Delhi on October 3, 2026, Malhotra highlighted tangible risks crypto poses to monetary sovereignty, monetary policy effectiveness, and the stability of India’s cross-border capital flows. However, the regulator’s cautionary approach does not mean rejecting the underlying technology. Instead, the RBI openly supports the use of distributed ledger technology (DLT) and tokenization to boost the efficiency of the national financial system.
Two Diverging Paths
The clear divide between rejecting private crypto assets and embracing blockchain technology has become increasingly evident through moves by India’s capital markets regulator (SEBI). On September 10, SEBI launched the Demat 2.0 pilot program dedicated to token-based corporate bond instruments. A DLT network was utilized to permanently record asset ownership, while transaction settlements were conducted purely using wholesale CBDC. The pilot recorded initial tokenized bond transactions settled with the digital rupee valued at ₹1,025 crore. The institutional transactions comprised three separate issuances: REC at ₹500 crore, Larsen & Toubro at ₹500 crore, and IIFL at ₹25 crore.
CBDC Expansion to the Retail Level
Beyond the wholesale sector, India is aggressively driving digital rupee adoption among the general public. Since August 14, the retail CBDC program has been trialed live for distributing government benefit transfers across Chandigarh as well as Dadra and Nagar Haveli. India’s ambitions also extend beyond its borders. In September, the governments of India and Russia initiated discussions to build a bilateral trade settlement infrastructure based entirely on CBDC. This monetary expansion complements the footprint of India’s UPI payment system, which is now fully operational across Singapore, France, the United Arab Emirates, Nepal, and Mauritius.
The Future of Private Crypto Remains in Limbo
Even as distributed ledger innovation is fully embraced by state institutions, independent crypto traders face mounting pressure. An internal government document from July revealed that the RBI is leaning toward a blanket ban on the circulation of private crypto and stablecoins. Although no comprehensive ban has been officially enacted as of October 4, 2026, room for maneuver for industry players continues to shrink. Crypto trading in India currently persists only under a stringent tax regime and anti-money laundering (AML) legal framework. As a mandatory operating requirement, all virtual digital asset service providers (VASPs) have had to register with the Financial Intelligence Unit-India (FIU-IND) since March 2023. The message is clear: the state is taking the technology, but curbing its circulation. Reported by crypto.news.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
