RBI Revives Push to Cut India Banks Off From Crypto
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- RBI is reportedly reviving its push to isolate banks from crypto, echoing a 2018 circular that directed regulated financial institutions to stop dealing in crypto or serving individuals and businesses involved in it.
- India ranked first in Chainalysis' 2025 Global Crypto Adoption Index, though the RBI reportedly challenged the methodology behind private-sector adoption rankings.
- The 2018 circular effectively severed crypto exchanges from India's banking system without banning individuals from owning or trading crypto.
- India's Supreme Court overturned the 2018 circular in March 2020 after a challenge from crypto exchanges and the Internet Mobile Association of India, ruling the RBI had not shown harm suffered by entities it regulated.
- The court upheld the RBI's authority to take preventive action but found the measure failed the test of proportionality.
- In May 2021, the RBI clarified banks could no longer cite the invalidated circular when cautioning customers, but could still enforce KYC, AML, and foreign-exchange compliance.
Why it matters: The RBI's reported new proposal would once again wall off crypto exchanges from India's banking rails, targeting the country that tops Chainalysis' adoption rankings. The 2018 circular was struck down for lacking proportionality, so any new attempt must clear a higher evidentiary bar — and exchanges are likely to litigate again.
