RBI Proposes 'Isolation + Prohibition' Approach to Crypto Asset Control

CoinFeed reported on July 3, citing the Economic Times, that the Reserve Bank of India (RBI) said in a submission to the Parliamentary Standing Committee on Finance that prohibition remains an important option in the international regulatory framework, recommending a containment strategy leaning toward 'banning' that completely isolates regulated financial institutions such as banks from crypto assets and privately issued stablecoins. The RBI warned that if regulated like traditional financial assets, it could create a false impression of 'safety' for highly speculative products with 'no real economic benefits' and trigger financial stability risks. The RBI also stressed that widespread use of stablecoins could weaken monetary sovereignty, disrupt monetary policy transmission, and fragment the payment system, reiterating the need to strengthen the country's digital payment infrastructure through central bank digital currency (CBDC).