RBI Tells Parliament Stablecoins Undermine Rupee Sovereignty, Calls for Prohibition

RBI told a parliamentary panel that cryptocurrency legalisation would threaten the economy, specifically arguing that stablecoins backed by foreign fiat like the dollar undermine India's monetary sovereignty.

If you thought crypto was merely a tax target at 30%, think again. The central bank's testimony, reported by PTI, went further: privately-issued digital assets are a direct challenge to the rupee's authority. Stablecoins, in particular, let users bypass the central bank's monetary policy entirely—exactly what CBDCs are designed to prevent.

Stablecoins as a Threat to Sovereignty

The RBI didn't mince words. Stablecoins, it said, "undermine the monetary sovereignty of the nation." Users should instead adopt the central bank digital currency (CBDC) for virtual asset transactions since it is issued by the RBI and backed by the rupee. That's a clear line: if you want digital dollars, use the state-sanctioned version, not Tether or USDC.

BJP MP Bhartruhari Mahtab, who chairs the parliamentary standing committee on finance, confirmed the RBI opposes legalising crypto assets. The committee has held seven meetings on virtual digital assets (VDAs) so far, and a report is expected soon.

Regulatory Action Beyond Words

This isn't just testimony. The Maharashtra government this week brought crypto assets under its Protection of Interest of Depositors Act, effectively classifying them as recoverable property that authorities can attach, seize, and liquidate from fraudsters to refund victims. The Enforcement Directorate (ED) carried out searches in Bengaluru in June for alleged FEMA violations involving cross-border money transfers through VDAs.

The RBI also refuted claims that India is one of the largest crypto adopters, calling private blockchain analytics methodologies "flawed" and biased toward populous countries. Meanwhile, foreign exchanges like Binance and Coinbase have re-entered the Indian market after registering with the Financial Intelligence Unit (FIU) and enforcing stricter KYC rules.

The committee's report, expected soon, could shape India's final stance—and whether those exchanges remain compliant or face another crackdown.

Source: RBI Calls Cryptocurrency A Threat To Economy, Opposes Its Legalisation
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