RBI's Sanjay Malhotra sticks to cautious approach on cryptos, backs local payments system

Reserve Bank governor Sanjay Malhotra

India’s central bank continues to be cautious on the adoption of digital assets and reiterated concerns cryptocurrencies pose to the country’s financial stability and monetary policy.

Reserve Bank governor Sanjay Malhotra, during an interview with CNBC-TV18, highlighted the risks associated with digital assets and pointed out the strengths of domestic digital payment systems such as UPI, NEFT and RTGS.

The remarks come at a time when the US administration led by President Donald Trump is moving rapidly to formalise crypto regulations.

“We’ve expressed our concerns… India’s payments landscape is unique,” Malhotra told the news channel, emphasising the strengths of local payments systems compared to cryptocurrencies.

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Malhotra said the country’s policy stance is under discussion by an inter-ministerial group formed by the central government.

A formal paper on the subject that will review the impact of crypto assets is expected to be presented by the end of this year.

Union finance minister Nirmala Sitharaman has also taken a cautionary stance on cryptocurrencies. The minister has advocated for a joint global approach to regulate cryptocurrencies, avoiding any unilateral steps.

In June this year, Moneycontrol had reported that the discussion paper, whose first draft could be released in July, could highlight the technological benefits. However, it will fall short of taking a definitive stand on regulation, the report had said.

Moreover, a report by The Economic Times had said that the central bank is tracking emerging international developments related to cryptocurrencies, Malhotra informed a Parliamentary panel recently.

The resurgence of crypto, fueled by Trump’s shift from a sceptic to a supporter, has drawn global attention. Trump’s own involvement in the sector and the US government’s move to establish a bitcoin reserve and introduce pro-crypto legislation have added momentum.