RBI Cautious on Crypto but Backs Blockchain Technology, Governor Malhotra Says

The RBI cautious on crypto stance was reaffirmed on Saturday, with Governor Sanjay Malhotra saying India continues to treat digital assets warily while actively supporting the technologies that underpin them. Speaking at the fifth Kautilya Economic Conclave in New Delhi, Malhotra said the central bank backs innovation in distributed ledger technology and tokenisation but remains guarded about crypto assets themselves.

The remarks matter because they reaffirm the RBI's long-held position at a time when India is developing its own digital rupee and applying tax and compliance rules to private digital assets. Malhotra's comments draw a clear line between the technology, which the central bank is already exploring, and private cryptocurrencies, which it views as a risk to monetary stability.

Why the RBI Cautious on Crypto Position Persists

Malhotra said India's concerns about cryptocurrencies centre on monetary sovereignty, the conduct of monetary policy and the management of capital flows. He linked the issue to the concept of the singleness of money, the idea that money should hold a uniform value, and warned that alternative forms of money could weaken monetary policy transmission.

The risks are especially acute for emerging market economies that maintain restrictions on capital flows, he said. ANI reported that the governor flagged worries over the singleness of money and the conduct of monetary policy, and he pointed to the complications that arise where capital movement is controlled.

The governor separated the tools behind digital assets from the assets themselves, Outlook Money reported. He said the central bank endorses these tools and has already put some of them into use, with certain applications being explored by the RBI and through public-private partnership initiatives.

Cross-Border Payments and the Digital Rupee

The governor argued that the problem crypto assets claim to solve is not domestic payments, which in India and many other countries are already efficient. "The problem that you are trying to address is primarily not so much of domestic payments, because domestic payments within our country and in many countries now are quite fast, cheap and convenient," he said.

The more significant challenge, Malhotra said, lies in cross-border payments, where he suggested central bank digital currencies could offer a solution. He said other options, including CBDCs, can be explored to improve international transactions, placing the digital rupee within the debate on upgrading cross-border payment systems without relying on private cryptocurrencies.

The RBI has been building and trialling the digital rupee even as it holds a guarded line on private crypto assets. The RBI cautious on crypto approach pairs support for financial technology with strict oversight of private digital assets, which remain outside the country's official currency system even as they are subject to tax and compliance requirements.

Bond Yields, Debt and Monetary Policy

Turning to global economic conditions, Malhotra addressed rising public debt and hardening bond yields worldwide. He said yield movements are essentially a function of demand and supply, with spending by governments and private enterprises increasing, including expenditure driven by artificial intelligence.

Malhotra said, "Money is scarce, spending has increased, both by the government as well as private enterprises, led by AI, and so that's what is leading to the hardening of the bond yields and debts."

On monetary policy, Malhotra said the RBI's approach remains primarily focused on domestic growth and inflation dynamics. He added, however, that global interest rates also have implications for India, including through their effect on real interest rates in the country. "That is something that we need to take care of," he said, noting that the central bank must remain attentive to international rate movements.

Financial Stability and the Limits of Resilience

Malhotra delivered a special address titled "Preserving Financial Stability in an Evolving World" at the conclave on 3 October 2026, according to PSU Connect. He cautioned that the financial system's current resilience should not be mistaken for protection against future vulnerabilities and called for continued vigilance.

Malhotra said, "Today's resilience may not necessarily imply tomorrow's immunity, and we are committed to remain vigilant of emerging vulnerabilities and continue to keep our financial system strong and resilient," pointing to the healthy balance sheets of banks and non-banking financial companies. He recalled that cleaning up the bad-loan legacy left by the excessive lending of the early 2000s took close to ten years, and invoked Minsky's Financial Instability Hypothesis to warn that prolonged stability can encourage excessive risk-taking.

He said shocks, whether originating inside or outside the system, cannot be avoided, so the goal should be a financial system that keeps delivering services even under severe stress. Malhotra concluded with five priorities for policymakers, including accepting that some shocks are inevitable, strengthening data and monitoring, ensuring resilience across the entire financial system and making sure innovation reinforces rather than erodes trust, PSU Connect reported.

Conclusion

Malhotra's remarks at the Kautilya Economic Conclave reaffirm the RBI cautious on crypto framework: wariness of private cryptocurrencies over concerns about monetary sovereignty, policy and capital flows, alongside active support for distributed ledger technology, tokenisation and the digital rupee. The central bank continues to develop and test its CBDC while private crypto assets remain outside India's official currency system. The next concrete step in this framework is the RBI's ongoing work on the digital rupee as a potential tool for cross-border payments.

Frequently Asked Questions

What did RBI Governor Sanjay Malhotra say about cryptocurrencies at the Kautilya Economic Conclave?

Speaking at the fifth Kautilya Economic Conclave in New Delhi on Saturday, Malhotra said India continues to treat cryptocurrencies with caution, citing worries over monetary sovereignty, the conduct of monetary policy and capital flows, while supporting innovation in the underlying technologies such as distributed ledger and tokenisation.

Why is the RBI cautious about crypto assets?

Malhotra said cryptocurrencies raise concerns related to the singleness of money and their potential impact on monetary policy. He added that the risks are greatest for emerging market economies that maintain controls on capital flows, and he linked the debate to monetary sovereignty.

What did Malhotra say about CBDCs and cross-border payments?

The governor said the more significant challenge is cross-border payments, not domestic payments, which are already fast, cheap and convenient in India. He said other solutions, including central bank digital currencies, can be explored to improve international transactions.

What did the RBI Governor say about rising bond yields and global debt?

Malhotra said yield movements are driven mainly by demand and supply conditions, as spending by governments and private companies climbs, including outlays tied to artificial intelligence. He said money is scarce and spending has increased, which is leading to the hardening of bond yields and debts.

How is India regulating private cryptocurrencies while developing the digital rupee?

The central bank is building and trialling its digital rupee even as it keeps a guarded stance toward private crypto assets. Transactions in such assets fall under tax and compliance rules, yet private cryptocurrencies still sit outside the country's official currency framework.