India Holds Back on Comprehensive Crypto Rules as Systemic Risk Concerns Dominate

India, once seen as a country ready to take the lead on crypto regulation, has chosen to delay the rollout of a full regulatory framework. According to a government document reviewed by Reuters, the Reserve Bank of India (RBI) believes that digital assets, if deeply integrated into the traditional financial system, could pose systemic risks too great to manage through regulation alone.

For now, India continues to allow limited peer-to-peer trading under strict tax and registration rules. The broader debate, originally scheduled for 2024, has been put on hold—partly to observe how international frameworks like the U.S. GENIUS Act unfold.

While Indian investors collectively hold about $4.5 billion in crypto, officials stress that this is not a systemic threat—at least not yet. The bigger fear is that widespread adoption of dollar-backed stablecoins could undermine India’s own domestic digital payment network, UPI, which has become the backbone of daily commerce.

Interestingly, while the RBI takes a conservative stance, India’s securities regulator (SEBI) has argued that crypto could be supervised by multiple agencies—similar to the U.S. model—instead of being restricted to one authority.

Why this matters: India’s cautious delay reflects the global tension between innovation and stability. Its next move could determine whether crypto thrives in one of the world’s fastest-growing digital economies—or remains sidelined in favor of homegrown financial rails.