Following the Reserve Bank of India’s (RBI) announcement of a 50 basis point cut in the repo rate, Governor Sanjay Malhotra raised renewed concerns about the growing influence of cryptocurrencies. The rate was lowered to 5.5% on June 6.
While the rate cut aims to stimulate economic growth amid slowing inflation, Malhotra cautioned that the unchecked expansion of digital assets could create significant systemic risks.
He stated that cryptocurrencies—especially those operating beyond regulatory oversight—have the potential to undermine the effectiveness of monetary policy, distort capital flows, and increase volatility in financial markets.
Malhotra warns crypto’s decentralization hinders monetary control
Malhotra emphasized that the decentralized nature of crypto assets makes it difficult for central banks to track financial activity and maintain control over the monetary system.
He warned that widespread crypto adoption could weaken the RBI’s ability to manage liquidity, interest rates, and currency stability.
The RBI has long maintained a cautious stance on digital assets, urging for coordinated global regulations.
The latest remarks highlight a growing urgency among Indian regulators to balance innovation with financial oversight.
While the RBI did not announce immediate policy changes regarding crypto, Malhotra’s comments indicate that tighter scrutiny and possible legislative actions could follow as India prepares to address both economic recovery and financial disruption risks from emerging technologies.
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RBI Governor’s remarks come as India reconsiders crypto regulations
Reserve Bank of India (RBI) Governor Sanjay Malhotra expressed his remarks at a time when India is re-evaluating its regulatory stance on digital assets.
“We are concerned about cryptocurrencies as they can hamper financial stability and have monetary policy implications,” Malhotra said, reinforcing the central bank’s longstanding apprehensions.
While the RBI has consistently pushed for a cautious approach, the Centre now appears to be softening its position, signaling potential policy shifts.
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India to release crypto discussion paper next month, guided by IMF-FSB insights
As reported by UnoCrypto earlier, the government plans to release a discussion paper on crypto assets next month. This paper is expected to draw from the IMF-FSB synthesis note, which provides global guidance on crypto regulation, as well as frameworks adopted in other countries.
The move reflects India’s intent to align with international standards while addressing domestic risks.
Malhotra’s comments underline the RBI’s view that cryptocurrencies, if left unchecked, could disrupt capital flows, reduce the effectiveness of monetary tools, and challenge the bank’s control over inflation and liquidity.
As India walks a tightrope between embracing innovation and preserving financial stability, the upcoming paper could play a pivotal role in shaping future regulations.
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