RBI Maintains Push for Crypto Ban to Tackle Tax Evasion: Reuters

Here’s a clear and refined paraphrased version:

Indian regulators continue to take a strict, cautious approach even as governments and financial institutions around the world increasingly adopt digital assets and blockchain technology.

From tokenization and stablecoins to strategic crypto reserves, global interest in the sector is rising. However, Indian authorities remain unconvinced, maintaining their long-standing resistance.

According to government documents reviewed by Reuters, the Reserve Bank of India (RBI) is still advocating for a policy that “leans toward prohibition,” while tax officials are raising concerns about significant compliance gaps.

This stance persists despite India having nearly 39 million crypto users out of a population of about 1.5 billion, collectively holding around $2.1 billion in digital assets as of May.

The RBI has consistently argued that banks and financial institutions should not be allowed to hold, trade, or provide exposure to cryptocurrencies or privately issued stablecoins, citing risks of financial contagion.

The central bank is also opposed to stablecoins pegged to the rupee—not just those tied to the U.S. dollar—warning they could weaken seigniorage and create vulnerabilities during periods of market stress.

CoinDesk has reached out to the RBI for comment.

Meanwhile, tax authorities are increasingly worried about underreporting. In the financial year ending March 2023, fewer than 25% of the 645,000 individuals who engaged in crypto transactions reported their gains in tax filings.

Tracking and taxing transactions conducted on offshore exchanges and peer-to-peer platforms—especially those denominated in rupees—remains a major challenge.

Since the Supreme Court overturned the RBI’s 2018 ban, crypto in India has existed in a regulatory grey area—neither fully legal nor clearly regulated. A proposed 2021 bill to ban private cryptocurrencies was never introduced, and policymaking has faced repeated delays.

Although the government has emphasized the need to balance innovation with risk management, recent internal documents suggest that key institutions are still hesitant to embrace digital assets.

India’s cautious approach is partly driven by macroeconomic concerns. The country’s reliance on energy imports and ongoing current account deficits make it vulnerable to external shocks. This was highlighted recently when rising tensions with Iran pushed up oil prices, increasing the import bill and driving the rupee to record lows.

Officials fear that widespread crypto adoption could accelerate capital outflows, bypass traditional financial systems, and further strain the country’s external balance.