BlockBeats News, July 3rd. The Reserve Bank of India (RBI) reiterated its support for a "prohibition with an inclination to restrict" regulatory strategy towards cryptocurrencies in a document submitted to the Parliament's Standing Committee on Finance. The RBI stated that "prohibition" remains one of the policy options recognized within the international regulatory framework. The RBI proposed that banks and other regulated financial institutions should not hold, trade, or provide exposure to cryptocurrencies and private issued stablecoins to prevent potential systemic risks.

The RBI expressed concerns that applying traditional financial regulations to cryptocurrencies could mislead the market, legitimize speculative assets with no real economic value, and give users a false sense of security. The RBI also cautioned that the widespread use of stablecoins could undermine India's monetary sovereignty, weaken the monetary policy transmission mechanism, fragment the payment system, and pose risks to financial stability. Therefore, it suggested prioritizing the development of central bank digital currency (CBDC) and other sovereign digital payment infrastructures.

Furthermore, the RBI questioned the ranking that "India is the country with the highest global cryptocurrency adoption rate," stating that the data based on private blockchain analytics firms has methodological flaws. The RBI highlighted that India currently has 54 cryptocurrency service providers registered with the Financial Intelligence Unit (FIU), with approximately 39.3 million users who have completed KYC authentication holding about ₹204.37 billion worth of cryptocurrency. It emphasized the need to clearly distinguish speculative cryptocurrencies from real-world assets such as government bonds and corporate bonds in order to avoid hindering the innovation of financial asset tokenization.