India Holds Back on Full Crypto Laws, Citing Systemic Risk and Global Uncertainty

India is signaling it will not move forward with sweeping cryptocurrency legislation, according to a government document reviewed by Reuters this month. Officials argue that enacting broad rules could unintentionally confer “legitimacy” on a speculative asset class and introduce potential systemic risks to the nation’s financial system.

Despite leading the world in grassroots crypto adoption, India appears content to maintain partial oversight. The Reserve Bank of India has long warned that regulating decentralized assets is difficult, and the latest document echoes this caution. It notes that a blanket ban might curb some risks but would fail to stop peer-to-peer trading or activity on decentralized exchanges.

Currently, global exchanges can operate in India if they register with a local agency for anti–money laundering checks. But high taxes on crypto gains and repeated central bank warnings have kept formal trading volumes low. The government estimates Indians collectively hold about $4.5 billion in crypto—an amount it says is too small to threaten financial stability.

The memo credits India’s fragmented approach—reliant on tax policy and general financial laws—with deterring rampant speculation and fraud. It also highlights the lack of global consensus on crypto regulation, making a unified national policy difficult to craft.

India previously floated a crypto ban bill in 2021 and later called for a global regulatory framework in 2023, but shelved a planned discussion paper to watch U.S. developments first. Meanwhile, the international landscape is shifting: pro-crypto U.S. President Donald Trump recently signed stablecoin legislation, while the UK, EU, Hong Kong, and South Korea are moving to strengthen their own regulatory regimes.

For now, India seems set to watch and wait, keeping crypto at arm’s length while the rest of the world tightens its rules.