Reiterating its long-standing opposition to the legalization of cryptocurrency, the Reserve Bank of India (RBI) told the Parliamentary Standing Committee on Finance that virtual digital assets (VDAs) such as Bitcoin (BTC) and other cryptocurrencies pose serious risks to India.
The RBI argues that because crypto assets operate outside the established banking system and are therefore difficult to regulate and supervise, they have the potential to jeopardize financial stability.
The central bank also warned that cryptocurrencies could aid illegal activities such as money laundering, narcotics smuggling and terrorism financing as many trading platforms and service providers are based abroad and are not accessible to Indian regulators.
In addition, RBI also mentioned During the meeting, it was noted that European jurisdictions only allow digital assets under strict regulatory frameworks. They even cited countries such as China and Qatar, which have completely banned crypto-related activities.
ICAI shares a different perspective
On the other hand, the Institute of Chartered Accountants of India (ICAI) took a different stance and advocated the implementation of a comprehensive legal framework for VDAs rather than a ban.
To enhance transparency and regulatory oversight, ICAI said it can help develop accounting standards, financial reporting principles and compliance guidelines.
Accounting and Auditing for VDAs ICAI can conduct comprehensive research on various types of VDAs and analyze their economic features. Based on such research, ICAI may develop detailed guidance on their recognition, measurement, presentation and disclosure in financial statements.
This dual view comes as the Indian government continues to tax cryptocurrency transactions without giving them legal status.
Although the country’s current crypto tax system has not changed, AMBCrypto recently reported India’s 2026 Union Budget has created a stricter compliance framework for the crypto industry by proposing fines on entities that neglect to report crypto asset transactions to tax authorities.
Why does the RBI see cryptocurrency as a threat?
This follows a two-quarter slowdown in retail cryptocurrency trading activity, according to TRM Labs data; That slowdown translates to $979 billion in the first quarter of 2026, down 11% annually from the first quarter of 2025, according to TRM Labs data.
Meanwhile, TRM Labs data also showed that the first half of 2026 saw a record 207 security breaches in the crypto industry; This was the most security breaches TRM Labs has ever tracked in a six-month period.
However, total losses fell rapidly to $972 million despite the increase in attack frequency; this was less than half of the $2.3 billion stolen during the same period in 2025.
Drawing attention to this issue, TRM Laboratories Global Policy President Ari Redbord said:
The underlying threat has not abated. In fact, it has become more sophisticated and more dangerous.
This proves that 2026 is one of the most challenging years yet, despite the cryptocurrency market evolving from a speculative, retail-focused space to a more institutional ecosystem.
Events such as security breaches, tighter liquidity, geopolitical tensions, regulatory uncertainty and reduced retail participation have slowed investor sentiment and market activity.
Final Summary
- RBI and ICAI share completely opposite recommendations regarding cryptocurrency operation in India.
- The rise in scams and slowdown in retail activities could be the reason behind this strict rule recommendation in India.
