India’s central bank is planning to prevent the country’s financial institutions from owning Bitcoin (CRYPTO: $BTC) and other cryptocurrencies.
In a written statement, India’s central bank said its new crypto policy is “leaning towards prohibition,” while tax officials have raised concerns about monitoring digital asset transactions.
The Reserve Bank of India said banks and financial institutions should be barred from holding, trading, or gaining exposure to any crypto assets.
The central bank states that it is important to keep digital assets outside the country’s regulated financial system.
The Reserve Bank of India is also skeptical of stablecoins, warning that privately issued stablecoins backed by foreign currencies could pose risks to monetary sovereignty.
At the same time, India’s tax department has highlighted instances of cryptocurrencies being misreported in income tax filings.
The tax department found that fewer than a quarter (25%) of the 645,000 people who conducted crypto transactions in 2023 reported them on their tax returns.
India’s government has said that crypto transactions routed through overseas exchanges and private wallets make it harder to identify owners and recover tax revenue.
Despite the government’s views, India remains one of the largest crypto markets in the world with nearly 39 million cryptocurrency investors who collectively hold about $2.1 billion U.S. worth of digital assets.
Bitcoin is trading at $61,800 U.S. on July 8.
