Economy & Banking★ Must Know

RBI Tells Parliamentary Panel Cryptocurrencies Are a Threat and Should Not Be Legalised

By TestNeeti Editorial TeamPublished Friday, 3 July 2026 2 min readSource: The Economic TimesArticle 1 of 5

On 3 July 2026, the Reserve Bank of India (RBI) told the Parliamentary Standing Committee on Finance (chaired by Bhartruhari Mahtab) that virtual digital assets (VDAs) such as cryptocurrencies pose a threat to an emerging economy like India and should not be legalised. The central bank reiterated its long-standing stance that banks and financial institutions should be insulated from crypto exposure, arguing that legalising such assets could legitimise speculative products with no underlying economic value and create financial-stability risks. The RBI also flagged that VDAs can facilitate illicit activities such as terror financing and narcotics smuggling, and that tracking offshore entities dealing in VDAs is a serious regulatory challenge. The committee chairman confirmed the RBI is not in favour of legalising cryptocurrency.

Key Facts & Details

9 points

1
The RBI told the Parliamentary Standing Committee on Finance that crypto/VDAs should not be legalised (3 July 2026).
2
The panel is chaired by Bhartruhari Mahtab.
3
RBI called virtual digital assets (VDAs) a threat to an emerging economy like India.
4
It recommended banks/financial institutions be insulated from crypto exposure.
5
It cited financial-stability risks and misuse for terror financing and narcotics.
6
It flagged the difficulty of tracking offshore VDA entities.

Deep Dive

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The RBI has consistently opposed private cryptocurrencies while promoting its own Central Bank Digital Currency (the e-Rupee/CBDC).
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Some aspects of VDAs are already covered under the Income-tax Act (a flat tax on VDA gains and TDS on transfers).
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India has pushed for a globally coordinated approach to regulating crypto assets, including during its G20 presidency.

Exam Focus

What was the RBI's stated position on legalising virtual digital assets (cryptocurrency) before the parliamentary panel in July 2026?

Exam Relevance & Angle

The RBI's stance on crypto is a recurring Banking & Financial Awareness / economy topic. Examiners test the regulator (RBI), the term virtual digital assets (VDAs), the anti-legalisation position and the CBDC contrast — all testable hooks in banking and UPSC exams.

Target Exams

SBI POIBPS POIBPS RRB OfficerRBI Grade BNABARD Grade ASSC CGLRRB NTPCLIC AAOUPSC CSEState PCS

Background & Context

Virtual digital assets (VDAs) — the legal term India uses for cryptocurrencies, tokens and NFTs — are privately issued digital assets not backed by any sovereign. The Reserve Bank of India (RBI) has long warned that such assets threaten monetary and financial stability, can enable money laundering and illicit finance, and lack intrinsic value; it instead champions a sovereign Central Bank Digital Currency (CBDC), the e-Rupee, which it has been piloting. India does not recognise crypto as legal tender but taxes VDA income (a flat 30% tax plus TDS under the Income-tax Act). The Parliamentary Standing Committee on Finance examines policies and functioning of the finance ministry, RBI and financial regulators.