NEW DELHI: India is leaning towards not creating legislation to regulate cryptocurrencies in the country and instead will maintain partial oversight, fearing that bringing the digital assets into its mainstream financial system could raise systemic risks, a government document shows.

The document, seen by Reuters, cites the Reserve Bank of India’s (RBI) view that, in practice, containing the risks of cryptocurrencies through regulation would be difficult.

Global acceptance of cryptocurrencies has improved since US President Donald Trump took office and prices of bitcoin, the world’s largest crypto-asset by market capitalisation, have hit record highs.

The US has also passed legislation permitting wider use of stablecoins, which are cryptocurrencies backed by fiat currencies making them less vulnerable to wild swings.

China continues to ban cryptocurrencies but is considering a yuan-backed stablecoin, Reuters reported last month. Although, Japan and Australia are developing regulatory frameworks for such virtual assets, they maintain a cautious stance without actively promoting the sector.

Regulating cryptocurrencies in India would grant them “legitimacy”, and “may cause the sector to become systemic”, the government document, prepared this month, said.

In contrast, while an outright ban can tackle the “alarming” risks from largely speculative crypto assets, it would not be able to tackle peer-to-peer transfers or trades on decentralised exchanges, it added.

Published in Dawn, September 11th, 2025