India Backs Blockchain, Not Crypto

Reserve Bank of India Governor Sanjay Malhotra has reaffirmed India’s cautious approach toward cryptocurrencies, highlighting concerns over their potential impact on monetary sovereignty, financial stability, monetary policy and cross-border capital flows. At the same time, the RBI continues to distinguish speculative crypto assets from the underlying technologies powering digital finance.

The central concern is that widespread adoption of privately issued cryptocurrencies could weaken the effectiveness of a country’s monetary system. If individuals and businesses increasingly transact or store wealth outside sovereign currencies, central banks could face greater difficulty managing liquidity, interest rates and capital movements—particularly during periods of economic volatility.

However, India’s caution toward cryptocurrencies does not translate into opposition to blockchain innovation. Malhotra emphasized support for technologies such as distributed ledger technology (DLT) and tokenisation, which can potentially improve the efficiency, transparency and programmability of financial transactions without undermining sovereign control over money.

Tokenisation could become particularly significant for banking and financial markets. Real-world assets such as bonds, deposits, securities and other financial instruments can potentially be represented digitally, enabling faster settlement, improved traceability, fractional ownership and automated transactions through programmable infrastructure.