RBI Pushes for Crypto Ban Amid Concerns Over Contagion and Capital Flight

The Reserve Bank of India (RBI) is pushing for a policy approach that leans towards prohibition on cryptocurrencies, despite having nearly 39 million investors holding approximately $2.1 billion in digital assets as of May 2026.

This stance is outlined in government documents reviewed by Reuters, which show the RBI's concern is contagion: it wants a clear boundary between crypto markets and the broader financial system to prevent volatility in digital assets from transmitting stress to banks or depositors.

The RBI also extended its concern to stablecoins, warning that dollar-pegged tokens could erode domestic monetary sovereignty by encouraging residents to hold foreign-currency instruments outside the banking system.