Summary of this article
RBI opposes legalising cryptocurrencies, citing risks to the economy.
Central bank flags terror funding and offshore transaction concerns.
ICAI supports comprehensive VDA law with accounting guidance framework.
The Reserve Bank of India (RBI) has reiterated its opposition in legalising virtual digital assets (VDAs), including cryptocurrencies, saying they may pose a threat to an emerging economy like India. The RBI presented its views before the Parliamentary Standing Committee on Finance, during a meeting on July 2, 2026 on the subject, Virtual Digital Assets (VDAs) and Way Forward. The committee is chaired by BJP MP Bhartruhari Mahtab.
The RBI told the panel that cryptocurrencies should not be legalised in India at the current stage because they may create risks to the financial system and the economy as a whole.
RBI Has Flagged Concerns Over Illegal Use
The RBI told the committee that digital assets have been misused for unlawful activities, such as terror financing and narcotics smuggling. It also pointed to the challenges of monitoring transactions involving offshore entities engaged in cryptocurrency trading.
The RBI said the cross-border nature of such transactions has made it difficult for regulators to track activities and enforce compliance effectively.
The RBI has also referred to the approach adopted by other countries. It has mentioned that China and Qatar have banned cryptocurrency-related activities, while several European countries have allowed VDAs under strict regulatory frameworks.
Parliamentary Panel Has Reviewed VDA Framework
Bhartruhari Mahtab told mediapersons after the meeting that RBI remains opposed to legalising VDAs in India. He added that the committee has discussed the taxation of VDAs under the Income Tax Act as part of its ongoing examination of the sector.
India has taxed income from the transfer of VDAs at 30 per cent. In addition, a 1 per cent tax deducted at source (TDS) is applied to certain crypto transactions, although cryptocurrencies have not been recognised as legal tender.
ICAI Backs Comprehensive VDA Law
The Institute of Chartered Accountants of India (ICAI), which also appeared before the committee, has supported the introduction of a comprehensive legal framework for VDAs.
ICAI said it can contribute by developing principle-based accounting and auditing guidance for VDAs. It also proposed conducting research on different types of digital assets and their economic characteristics.
Based on this research, ICAI has said that it can issue guidance on the recognition, measurement, presentation and disclosure of VDAs in financial statements. It added that such a framework can help improve financial reporting and strengthen compliance standards for stakeholders dealing with digital assets.
The parliamentary panel has examined the regulatory, taxation and accounting aspects of VDAs as it has studied the way forward for the sector in India.
