The Reserve Bank of India (RBI) is taking a cautious stance on cryptocurrencies and stablecoins, Governor Sanjay Malhotra said on Thursday, 20 November.

“Stablecoins, cryptos, they have a huge risk, and so we are adopting a very cautious approach towards it,”

he noted in a memorial lecture at the Delhi School of Economics.

“But at the same time, when it comes to digital innovations like UPI (unified payments interface) or digital lending, our stance has been very accommodative and very enabling.”

Reuters reported that the growing popularity of US dollar-backed stablecoins is expected to be a key trend next year and may pose challenges for global monetary policy, according to Chief Economic Adviser V. Anantha Nageswaran.

Malhotra recently said at an International Monetary Fund and World Bank event that the RBI aims to promote its central bank digital currency ahead of stablecoins or cryptocurrencies.

He added that the government will make the final decision on whether cryptocurrencies should be regulated.

“The government has to take a final view. There is a working group that was set up earlier, and they will take a final call as to how, if at all, crypto is to be handled in our country,”

he said.

India is leaning towards refraining from introducing specific legislation to regulate crypto and may instead maintain partial oversight, due to concerns that integrating such assets into the mainstream financial system could create systemic risks, Reuters reported in September.

Global crypto exchanges can currently operate in India by registering with a government agency responsible for due diligence and anti–money laundering checks.

Gains from cryptocurrencies are subject to punitive taxes, while the RBI has repeatedly warned of the risks associated with engaging with such assets, contributing to a near standstill in trading between the formal financial system and crypto platforms.

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