Key Highlights
- RBI says cryptocurrencies have no intrinsic value, issuer or promise to pay, and are driven purely by speculation.
- Stablecoins could weaken monetary policy, banking stability and lead to dollarization, the RBI warns.
- India is pushing a sovereign-backed digital rupee (CBDC) as a safer alternative to private crypto.
The Reserve Bank of India (RBI) has reiterated its hard line on private cryptocurrencies, with Deputy Governor T. Rabi Sankar saying they cannot be treated as money, currency or even genuine financial assets, but are essentially speculative pieces of computer code.
Addressing the Mint Annual BFSI (Banking, Financial Services and Insurance) Conclave 2025, Sankar cautioned that cryptocurrencies pose risks to monetary stability, fiscal policy and the wider financial system.
Crypto is not money, says RBI
Sankar said cryptocurrencies fail to meet the most basic features of money. “Cryptocurrencies have no intrinsic value. They are not backed by a promise to pay, and they have no issuer. Their value is purely speculative,” he said.
He explained that money derives its credibility from sovereign backing and public trust in a recognised issuer such as a central bank. “Currency or deposits carry a promise from a trusted issuer, and money derives its credibility from the sovereign that backs its value,” he said, adding that cryptocurrencies claim to redefine money while representing no underlying value at all.
According to Sankar, cryptocurrencies such as Bitcoin do not generate any underlying cash flows and therefore cannot be classified as financial assets. They are not even assets, he remarked, describing crypto as “just a piece of code.”
‘Pure gamble’, not investing
On whether cryptocurrency trading is comparable to gambling, the RBI deputy governor said unbacked cryptocurrencies amount to “pure gamble based on mathematical bets.” He noted that traders largely bet on price movements driven by events or sentiment rather than fundamentals.
Drawing a historical parallel, Sankar likened the crypto boom to the tulip mania of the 17th century, where prices were fuelled entirely by speculation.
His comments come against the backdrop of India’s tightening stance on speculative digital activities. The Promotion and Regulation of Online Gaming Act, 2025, enforced from October 1, 2025, led to a nationwide ban on real-money gaming applications, renewing debate over the nature of crypto trading.
Stablecoins lack basic attributes of money
Sankar also mounted a strong critique of stablecoins — cryptocurrencies designed to maintain a stable value, typically pegged to a fiat currency such as the US dollar.
Speaking at the BFSI conclave and later at a media interaction in Mumbai on December 12, 2025, he said stablecoins do not “appear to have” a promise to pay, which is a defining feature of sovereign currency.
“Stablecoins lack the basic attributes of money, their advantages are neither unique nor unambiguous, and their risks are all too real,” Sankar said.
Risks to monetary policy and financial stability
The deputy governor warned that widespread adoption of stablecoins could pose serious macro-financial risks, including currency substitution, dollarisation, and weakened monetary-policy transmission.
He said stablecoins fail to satisfy the two defining features of modern money — fiat status and singleness. “It is possible that in a stablecoin system, there would be hundreds, or more, of currencies in an economy, making any such system inherently unstable,” Sankar said.
Stablecoins, he added, are ultimately private money and do not carry the sovereign backing that underpins trust in fiat currencies. He questioned whether they even constitute a clear liability of their issuers, noting that “neither of the two major cryptocurrencies in use today makes such unconditional promise” to redeem at par.
Sankar cautioned that large-scale adoption could divert deposits away from banks, raise funding costs and increase reliance on central-bank liquidity, thereby weakening banking intermediation and increasing systemic risk.
Claimed benefits ‘largely unproven’
Dismissing claims that stablecoins offer superior payment efficiency or financial inclusion, Sankar said such benefits remain largely unproven.
India’s domestic payment systems, including the Unified Payments Interface (UPI), already provide fast, low-cost, and reliable digital payments, he said. In contrast, stablecoins are largely confined to facilitating trading and leverage within the crypto market itself.
Legal status of crypto in India
In India, cryptocurrencies are not recognised as legal tender and continue to operate outside any specific regulatory framework. Although people are permitted to buy, sell, and hold crypto assets, such transactions attract steep taxes, reflecting the government’s effort to limit their spread without imposing an outright ban.
Union Commerce Minister Piyush Goyal has reiterated that private cryptocurrencies do not have the government’s backing, saying they lack both sovereign support and any tangible underlying assets.
RBI pushes CBDC alternative
The Government of India and the Reserve Bank of India are instead focusing on a central bank digital currency (CBDC) as a safer option, with the digital rupee — backed by the sovereign, aimed at delivering the convenience of digital payments while preserving monetary stability.
The RBI began pilot trials of its CBDC around three years ago, in line with similar initiatives undertaken by other central banks globally.
Global contrast and continued caution
Sankar said sovereign currencies derive their strength from the backing of central banks worldwide and institutions such as the International Monetary Fund (IMF), a support system that gives them credibility, something private digital tokens do not have.
He noted that although some countries have adopted a more permissive approach — citing the United States, where President Donald Trump has signed an executive order placing Bitcoin within a reserve framework — Indian regulators remain wary, pointing to the steady rise in crypto-related scams and fraud cases.
Reiterating the RBI’s position, Sankar said cryptocurrencies neither function as money nor qualify as genuine financial assets, warning that their unchecked growth could pose serious risks to economic and financial stability.
Also Read: India Cracks Down on Crypto Traders with 44,000 Tax Notices
