India central bank proposes crypto containment for banks

The Reserve Bank of India is advocating for a policy of "calibrated containment" to shield the country's banking system from cryptocurrencies and privately issued stablecoins, according to reports of its recent submissions to lawmakers. Senior officials presented the central bank's position to the Parliamentary Standing Committee on Finance on Thursday, July 2, 2026, as part of a broader review of India's digital asset framework.

The RBI's recommended strategy focuses on preventing the use of cryptocurrencies in payments and settlement systems while restricting the exposure of banks and other regulated financial institutions to such assets. Officials reportedly emphasized that an outright prohibition remains a recognized policy option, but the operational thrust is to limit crypto's role in core financial functions. The central bank warned that applying traditional financial regulation to crypto assets could inadvertently legitimize speculative tokens and create a false sense of safety for users.

A key element of the proposal is a clear distinction between cryptocurrencies and tokenized versions of regulated financial instruments. The RBI urged policymakers to separate crypto...