India to Avoid Crypto Regulation, Cites Systemic Risk Concerns
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India is moving away from creating specific legislation to regulate cryptocurrencies and instead plans to maintain partial oversight, citing systemic risks if digital assets are given legitimacy. A government document notes the Reserve Bank of India’s view that regulation would be difficult to enforce, while a ban would not stop peer-to-peer or decentralized trading. India had previously considered a ban and called for a global regulatory framework during its G20 presidency, but has since delayed formal policy decisions, opting to watch U.S. and global developments, including the adoption of stablecoins. Currently, crypto exchanges can operate in India if registered and subject to strict due diligence and heavy taxation, which, along with existing laws, has curbed speculative activity and limited exposure of the financial system. Although Indians hold about $4.5 billion in crypto, the government views the sector as non-systemic for now. However, it warns that widespread use of U.S. dollar-backed stablecoins could fragment payment systems and undermine India’s UPI network, requiring closer scrutiny going forward.