Cryptocurrency and the Indian Banking Sector: Navigating Legal Uncertainty and
Regulatory Reform
Abstract:
The banking industry in India has both potential and regulatory concerns as a result of the
changing cryptocurrency landscape. The research presented here looks at the institutional risks,
legal ambiguities, and compliance requirements that banks face as a result of the growth of
crypto-assets, especially in the lack of a clear legislative framework. The paper finds important
difficulties like as loopholes in consumer protection, inadequacies in AML/KYC enforcement,
taxation ambiguities, and operational limits imposed by RBI's cautious approach by combining
doctrinal legal analysis with empirical data gathered from banking professionals.
Blockchain technology and digital currencies are gaining popularity, but banks are still cautious
because of regulatory opacity, the anonymous and international nature of crypto transactions,
and the absence of judicial recognition of tools like smart contracts. The paper emphasizes the
fragmented state of crypto regulation in India by referencing comparative regulatory patterns
and Supreme Court rulings like Internet and Mobile Association of India v. RBI.
In order to balance innovation and risk management, the paper suggests implementing a
regulatory sandbox model, improving cooperation amongst financial regulators, and reforming
legislation to create a single legal framework. In order to improve compliance and institutional
trust, it also demands clear taxation, strong AML procedures, and focused investor protection.
The research concludes by advocating for a fair, progressive legal framework that maintains
regulatory integrity and financial stability while empowering the Indian banking industry to
interact with crypto-assets with assurance.
Key Words: Cryptocurrencies, Indian Banking Sector, Blockchain Regulation,
AML/KYC, and Consumer Protection
Introduction:
An important shift in the global financial system, the rise of cryptocurrencies is changing the
way money is perceived, held, and traded. Blockchain technology, the unchangeable,
decentralized ledger system that powers cryptocurrencies like Bitcoin and Ethereum, is at the
heart of this development. “Since the launch of Bitcoin in 2009 by the pseudonymous figure
1
Satoshi Nakamoto 1, the market has expanded to encompass over 20,000 cryptocurrencies
globally, with a total market capitalization reaching $1.72 trillion as of early 2024 2.” India,
which was first wary of cryptocurrencies, has seen a sharp increase in interest and investment
in them, and according to Chainalysis, it will rank second globally in terms of adoption in
2022 3.
India's legal and regulatory position on cryptocurrencies is still unclear despite this progress.
Through a 2018 circular that essentially prohibited banks from doing business with crypto-
related entities, the Reserve Bank of India (RBI) first discouraged the usage of cryptocurrency.
In Internet and Mobile Association of India v. Reserve Bank of India 4, the Supreme Court
later overturned this, ruling that the RBI's general prohibition was excessive and violated the
right to trade guaranteed by Article 19(1)(g) of the Constitution. The fundamental question of
the legitimacy and regulation of cryptocurrencies was not, however, addressed by the ruling.
Rather, it revealed the legal ambiguity and regulatory gap pertaining to digital assets in India.
The banking and financial sectors have been significantly impacted by this uncertainty. As
essential to the operation of any regulated economy, banks must adhere to strict compliance
standards, especially those pertaining to Know Your Customer (KYC) and Anti-Money
Laundering (AML) regulations set forth in the Prevention of Money Laundering Act of 2002
and RBI Master Directions 5. These rules are inherently threatened by the decentralized,
pseudonymous character of cryptocurrencies, which makes financial institutions reluctant and
disoriented to permit transactions involving cryptocurrencies. Furthermore, a flat 30% tax on
gains from virtual digital assets and 1% TDS on transactions were established in the 2022
Union Budget; however, this also lacked clarity about classification and valuation for the
purposes of income tax and GST 6.
Therefore, the lack of a clear and comprehensive regulatory structure to oversee
cryptocurrencies in India is the issue. All parties involved are impacted by this legal gap: banks
are at danger of noncompliance, investors are not legally protected, and regulators find it
difficult to implement anti-fraud and anti-money laundering measures. Crypto exchange
crashes, hacking, and frauds, which sometimes leave victims without any enforceable legal
1
Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 2008
2
CoinMarketCap, ‘Market Capitalization Data’ https://coinmarketcap.com accessed 17 April 2025
3
2022 Geography of Cryptocurrency Report, Chainalysis
4
Internet and Mobile Association of India v Reserve Bank of India Supreme Court 2720, AIRONLINE 2020 SC
298
5
RBI, Master Direction on KYC, 2023
6
Ministry of Finance, Union Budget Speech, 2022
2
redress, intensify these worries. The issue is made more difficult by the fact that smart contracts
and blockchain-based agreements are not legally recognized. This is because they are not
covered by the Indian Contract Act 1872, which makes it difficult for courts to enforce them.
The present research is important to the field of banking law because it examines how
traditional banking regulations and the changing needs of the digital asset economy interact.
With the rise of digital currency exchanges and decentralized finance (DeFi), banks, who have
historically served as the gatekeepers of financial transactions, are now being forced to
reconsider their function. Although the RBI has suggested the Central Bank Digital Currency
(CBDC) as a controlled substitute, the broader issues surrounding private cryptocurrencies
remain unresolved by its implementation.
The objective of this paper is to examine the legal loopholes and regulatory issues surrounding
cryptocurrencies in India, especially as they relate to the banking sector. Examining present
regulatory concerns, spotting gaps in consumer protection, assessing bank compliance risks,
and suggesting legislative changes are some of the goals of the study. The research topics focus
on how banking institutions are adjusting to crypto-related difficulties, whether legislative
protections are lacking, and whether current frameworks are sufficient.
Legal and Regulatory Framework of Cryptocurrencies in India:
In India, the legal and regulatory environment surrounding cryptocurrency is still unclear and
disjointed. While there is no express prohibition on holding or transacting in cryptocurrencies,
the absence of a dedicated regulatory statute creates ambiguity in their recognition,
classification, and legal treatment across financial and banking systems.
Current Legal Status and Classification
India does not currently recognize cryptocurrencies as legal tender. They are neither recognized
financial instruments nor actual money since neither the government nor the Reserve Bank of
India (RBI) issue or support them. This duality in status has created a grey area in regulatory
treatment 7. However, they are also not inherently unlawful. A regulatory challenge has arisen
as a result of this legal ambiguity because cryptocurrencies transcend conventional
categorization. Only in the Finance Act 2022, under section 2(47A) of the Income Tax Act
1961 8, was the term “virtual digital asset” explicitly adopted, offering the first indication of
7
International Bar Association, Legal Status of Cryptocurrency in India, IBA, 2023
8
Income Tax Act 1961, s 2(47)
3
statutory acceptance. However, the definition is limited to the context of taxation and does not
confer any legal status or consumer rights to holders of such assets.
Enforceability and dispute resolution are directly impacted by this lack of recognition. The
Indian Contract Act 1872 does not specifically address smart contracts or blockchain-based
agreements, and Indian courts have not yet established legally enforceable guidelines for
resolving disputes involving digital assets, particularly those resulting from theft, fraud, or
breach of contract. As a result, the legal system has had difficulty adjusting to the technological
foundations of these kinds of transactions.
RBI Circulars, Guidelines, and Judicial Review
The RBI's cautious approach has dominated the regulatory narrative. In 2018 9, the RBI issued
a circular directing all regulated entities to cease dealing in virtual currencies and to refrain
from providing services to individuals or businesses involved with cryptocurrencies. This
action essentially blocked crypto exchanges' access to banking, which had an impact on the
sector's operating sustainability for a number of participants.
But in Internet and Mobile Association of India v. Reserve Bank of India 10, the Supreme
Court ruled that the circular was illegal because it unnecessarily restricted the ability to engage
in trade and business as guaranteed by Article 19(1)(g) of the Constitution. The Court noted
that the RBI's general restriction on cryptocurrency could not be upheld in the absence of any
statutory ban. The crypto sector welcomed this historic ruling as a reprieve, but it also made
clear how urgently legislation is needed.
In response, the RBI clarified in 2021 11 that banks should not use the revoked 2018 circular as
a reason to reject cryptocurrency transactions. However, the RBI also reaffirmed that strict
adherence to AML and KYC regulations is required for due diligence. This contradictory
position illustrates the RBI's continued institutional hesitancy, as it respects the Supreme
Court's order but is nonetheless worried about the systemic threats posed by digital currencies.
Taxation under Income Tax and GST Laws:
9
RBI Circular: DBR.No.BP.BC.104/08.13.102/2017-18, dated 6 April 2018
10
Internet and Mobile Association of India v Reserve Bank of India Supreme Court 2720, AIRONLINE 2020 SC
298
11
RBI Notification: DOR.AML.REC.18/14.01.001/2021-22, dated 31 May 2021
4
A flat tax rate of 30% was applied to gains resulting from the transfer of virtual digital assets
by the Income Tax Act, which came into effect after the Finance Act, 2022 12. “This
classification treats cryptocurrencies similarly to speculative assets like gambling winnings,
without allowing deductions for losses 13.” The only deduction allowed was the cost of
acquisition. Additionally, section 194S imposed a 1% TDS on all transfers over ₹50,000 in a
fiscal year. These policies have been criticized for discouraging innovation and putting
investors through onerous compliance requirements, even though they seem to legitimize
cryptocurrency to some degree.
It is currently unclear whether cryptocurrencies should be categorized as securities, goods, or
services under the Goods and Services Tax (GST) framework. No clear guidelines have been
released by the Central Board of Indirect Taxes and Customs (CBIC). Crypto exchanges have
been subject to GST on their commissions or facilitation fees under service tax regulations,
however the actual trading of crypto tokens has not been treated consistently. This has resulted
in a variety of interpretations.
Absence of a Dedicated Regulatory Statute
The lack of a comprehensive regulatory statute is the most obvious weakness in India's crypto
framework. Although a total ban was suggested in the draft Banning of Cryptocurrency and
Regulation of Official Digital Currency Bill 2019, it was never introduced in Parliament.
Private cryptocurrency regulation and prohibition have alternated in subsequent drafts, but
none of them have become law.
The Reserve Bank of India Act 1934's Central Bank Digital Currency (CBDC) pilot program,
which is now underway, is a parallel effort that does not address how privately produced digital
currencies are regulated. In its 275th Report 14, the Law Commission of India suggested that a
more comprehensive debate be had about the rights of holders of digital assets and the legal
recognition of financial products based on blockchain technology.
Challenges Faced by the Banking Sector:
12
Income Tax Act 1961, s 115BBH
13
CBDT Circular No. 12/2022
14
Law Commission of India, 275th Report on Legal Framework for New Age Technologies, 2023
5
India has been a global leader in the use of cryptocurrencies, with increasing numbers of users
on both centralized and decentralized platforms. Digital assets are still actively used by the
Indian population in spite of high taxes and ambiguous regulatory frameworks 15.
In addition to challenging established financial systems, the rise of cryptocurrencies has
presented Indian banks with a challenging and dynamic situation. While global banking
institutions have gradually begun integrating blockchain-based technologies, Indian banks
continue to operate in a climate of regulatory uncertainty and legal ambiguity, making their
role in supporting or resisting the growth of crypto services particularly significant. The
Reserve Bank of India's fluctuating position on cryptocurrencies and the absence of a defined
regulatory framework have caused operational ambiguity and reluctance among banking
institutions, according to Dr. Pradeep Chaurasiya's research 16.
Compliance Burden Due to Regulatory Uncertainty:
Interviews with banking professionals revealed that the difficulty of compliance resulting from
India's unclear cryptocurrency regulations is one of the most important challenges. Without
thorough guidance on how these laws apply to cryptocurrency transactions, banks are left in a
precarious position. Banks are expected to comply with both RBI guidelines and statutory
obligations under laws like the Foreign Exchange Management Act of 1999 and the
Prevention of Money Laundering Act of 2002.
According to the respondents, internal compliance departments frequently lack the knowledge
necessary to keep an eye on and report questionable transactions involving cryptocurrency
platforms, particularly when those platforms use complex fund routing. The RBI's and the
government's contradictory statements add to this misunderstanding. The 2018 banking ban
was removed by the Supreme Court in the case of Internet and Mobile Association of India v.
RBI 17, but the RBI is still warning about the threats that cryptocurrencies represent to the
integrity of the financial system 18. Because of this, banks take a risk-averse stance, which
hinders legal transactions and puts an undue amount of scrutiny on compliance teams.
15
Reuters, India Leads Crypto Adoption for Second Straight Year, Report Shows, Reuters, 11 September 2024
16
Dr Pradeep Chaurasiya, Cryptocurrencies and Banking System in India – A Conceptual Analysis, ResearchGate,
2023
17
Internet and Mobile Association of India v Reserve Bank of India Supreme Court 2720, AIRONLINE 2020 SC
298
18
RBI Annual Report 2022–23
6
Legal experts contend that because there is no explicit statutory framework, banks are
compelled to expand duties from general rules, which might result in overcompliance or, on
the other hand, unintentional violations.
Operational Risks in Crypto-Linked Transactions
Bankers have also raised concerns about operational risks, which include fraud, lack of
accountability, and technical weaknesses. Since banks function as financial facilitators, they
frequently have to deal with the fallout from unsuccessful transactions, compromised wallets,
or fraudulent schemes in which cryptocurrencies are the main means of transfer.
Respondents noted that reversibility, a crucial security component of conventional banking
transactions, is mostly lacking in cryptocurrency payments. Without the receiving party's
assistance, it is nearly impossible to reverse a cryptocurrency transaction once it has been
started. Because of this, banks are reluctant to approve inward credits or outgoing remittances
that appear to be related to cryptocurrency exchanges.
Additionally, the hazards associated with cybersecurity are greatly increased. Crypto-based
systems are decentralized and frequently depend on third-party wallet providers or exchanges
with varying security requirements, in contrast to centralised financial systems where banks
can implement a standardized security system. Because of this, some crypto platforms—
particularly those that are not registered with the Ministry of Corporate Affairs or have unclear
UBO (Ultimate Beneficial Ownership) disclosures—have had their services restricted by
Indian banks.
Primary Data: Interview Findings from Banking Professionals
Structured interviews with banking professionals from both public and private sector
institutions yielded insights that showed a range of convergent viewpoints on the crypto
phenomena. Although all of the participants agreed that people are more aware of
cryptocurrencies, there is still little use of them in banking systems.
According to a number of experts, the majority of branch and compliance-level policy
decisions are influenced by risk perception. Some disclosed that sections on virtual digital
assets have recently begun to appear in internal circulars and training modules, with a primary
emphasis on reporting obligations and warning signs rather than chances for service innovation.
7
The majority of respondents raised concerns about the technical difficulty of monitoring the
1% TDS under section 194S of the Income Tax Act when cryptocurrency transactions are
conducted through peer-to-peer networks. According to one compliance officer, banks
frequently get inquiries from customers regarding delayed credits pertaining to cryptocurrency
gains, but they are unable to help because of the RBI's unofficial prohibitions on such
transactions.
Remarkably, some private bank respondents took a more lenient stance, proposing that India
adopt Singapore's tiered licensing structure for cryptocurrency platforms 19, enabling banks to
offer authorized services without running the risk of non-compliance with AML regulations.
Risk Mitigation through AML/KYC Enforcement
In response to these issues, banks have strengthened their KYC policies, particularly for
accounts that may be linked to cryptocurrency. In an effort to spot money laundering-related
trends like round-tripping and layering, several institutions have recently included AI
capabilities into their transaction monitoring software. However, such measures are only
partially effective because crypto transactions are pseudo-anonymous.
Although AML enforcement is still essential, its effectiveness is lessened in the absence of
regulatory backing specific to virtual assets. India continues to violate some travel rule
guidelines for virtual asset service providers, according to the FATF 2023 report 20. According
to respondents, banks would continue to stay on the side of caution and limit their involvement
in digital asset transactions unless Indian law requires registration and frequent audits of crypto
platforms.
Legal Gaps and Risks in Fraud, Money Laundering, and Consumer Protection
Cryptocurrency's disruptive potential has come with significant legal difficulties related to
consumer protection, money laundering, and fraud. These hazards are still mostly ignored by
Indian law in the lack of a unified legislative regime. These weaknesses and the necessity of
legal reform are critically examined in this part, with a focus on banking and financial
regulation.
Anonymous and Cross-Border Nature of Crypto Transactions
19
Monetary Authority of Singapore Guidelines on DPT Services, 2022
20
FATF Mutual Evaluation Report on India, 2023
8
Wallet addresses and keys serve as an equivalent for official identity in cryptocurrency
transactions, which take place on a decentralized, pseudonymous network. It is very
challenging to track the source or destination of funds because of this pseudo-anonymity,
particularly when they are layered through international exchanges. India's noncompliance
with the “travel rule,” which mandates that cryptocurrency platforms gather and exchange
transaction originator data internationally, is highlighted in the FATF 2022 Report on Virtual
Assets 21.
Frequent incoming transfers from unregulated offshore wallets, which are hard to detect unless
they are converted into Indian rupees (INR) through Indian banking institutions, were another
issue brought up by respondents during primary interviews. These characteristics increase the
likelihood that cryptocurrencies will be used for capital control evasion, money laundering,
and financing terrorism 22. Notably, the Enforcement Directorate's 2022 investigations into
WazirX demonstrated how cryptocurrency was used to transfer funds overseas without
adequate regulatory oversight 23.
Weaknesses in Existing AML/KYC Mechanisms in Crypto Exchanges
Despite their self-imposed nature and lack of regulatory requirement, the majority of significant
Indian cryptocurrency exchanges assert that they adhere to AML standards. Crypto platforms
are exempt from filing Suspicious Transaction Reports (STRs) with the Financial Intelligence
Unit because they are not considered “reporting entities” under Section 2(wa), in contrast to
banks and NBFCs, which are subject to the Prevention of Money Laundering Act 2002. Virtual
digital asset platforms are now required to report suspicious activity and keep transaction
records in accordance with international standards, according a government notification that
Reuters reported 24.
Furthermore, Indian exchanges have not always followed the same KYC protocols. According
to a study conducted by the Vidhi Centre for Legal Policy, some platforms did not require PAN
or Aadhaar until significant transactions were completed, and trading was permitted with only
email verification. Banking institution respondents stressed that when consumers engage with
these platforms, these vulnerabilities expose banks to indirect AML risks.
21
FATF, Mutual Evaluation Report on India, 2022
22
Ram Singh, The Perils of Decentralised Finance (DeFi), Economic and Political Weekly, 2024
23
ED Press Release, 5th August 2022
24
Reuters, India’s Money Laundering Rules Apply to Crypto Trade – Government Notification, Reuters, 8 March
2023
9
Gaps in Consumer Protection: No Dispute Resolution Mechanism, Fraud, Exchange
Collapse
The total absence of consumer protection in the cryptocurrency industry is one of the biggest
worries. Crypto customers lack the authority to file complaints with SEBI, RBI, and IRDAI, in
contrast to traditional finance. Indian investors have no recourse in situations involving fraud,
hacking, or loss of access.
When the Singapore-based exchange blocked withdrawals in 2022, Indian investors lost access
to their money, a situation that garnered national attention during the Vauld insolvency
proceedings. According to interviews, the majority of bank staff received complaints from
clients who had lost money but were unable to seek legal redress because SEBI and RBI do not
have authority over these exchanges.
In its 280th Report, the Law Commission of India emphasized the need to develop new dispute
resolution procedures for disputes involving fintech; nevertheless, no specific actions have
been made for the cryptocurrency industry.
Taxation Ambiguities and Lack of Clarity on Capital Gains or GST
Section 115BBH (30% tax on gains) and Section 194S (1% TDS) are two new modifications
that attempt to tax cryptocurrency under the Income Tax Act of 1961, but they are
insufficiently comprehensive to address the complexities of crypto taxation. For example,
unlike other capital assets, there is no provision for loss offset. Real investors are discouraged
by this disparity, which also makes taxes unpredictable.
The effects of GST are much less clear. Although no official classification has been established,
the GST Council discussed taxing cryptocurrency transactions at a rate of 28% in 2022,
comparing them to gambling. According to legal experts, tax administration becomes
haphazard and irregular in the absence of a precise definition of cryptocurrencies as “goods,”
“services,” or “securities” under Section 2 of the CGST Act 2017.
Additionally, banks that deal with cryptocurrency-related transactions are confused about how
to apply GST to service fees that exchanges charge. Our interviews revealed that several private
banks have declined to handle crypto-fiat conversions because they are concerned about a GST
audit.
Recommendations for a Balanced Legal Framework
10
The disruptive power of cryptocurrencies is currently posing a challenge to India's legal and
financial structures. Although it is clear that crypto-assets have the potential to promote
innovation and financial inclusion, there are serious systemic and consumer risks associated
with their unregulated status. Therefore, flexibility and protections must be balanced under a
well-calibrated legal framework. This part highlights important improvements that can
harmonize crypto regulation within the current banking law framework, drawing from legal
literature, regulatory developments, and primary interviews with banking professionals.
Key Legislative Reforms Needed
The adoption of a comprehensive cryptocurrency law is the most important requirement.
No Indian legislation currently defines cryptocurrencies or creates regulatory control for
actions pertaining to them. Experts and the Blockchain and Crypto Assets Council (BACC)
have emphasized time and time again that India's dependence on tax laws or circulars rather
than legislation creates further legal ambiguity. To guarantee legal clarity under the RBI and
SEBI frameworks, virtual digital assets (VDAs) must be explicitly classified by the law as
commodities, securities, or as a new category under financial instruments.
Second, improved AML/KYC procedures and reporting requirements must be required under
the statute. According to banking specialists interviewed, cryptocurrency exchanges, like banks
and mutual funds, must be designated as “reporting entities” under the Prevention of Money
Laundering Act 2002, s. 2(wa). The FATF's 2021 Updated Guidance on Virtual Assets also
supports this plan, which would legally require them to file Suspicious Transaction Reports
(STRs), guarantee KYC verification at onboarding, and audit cross-border transfers.
The law must also incorporate consumer protection measures, such as a specific grievance
redressal forum for complaints pertaining to cryptocurrency, in order to combat the widespread
frauds and scams. This idea is more important now than ever. In its 103rd Report on Contract
Law (1984), the Law Commission of India noted that consumer redressal systems must
change to keep up with new financial technology. The Deposit Insurance and Credit
Guarantee Corporation (DICGC) safeguards offered to bank depositors under the RBI Act
1934 will be mirrored in an insurance-backed safety fund for users impacted by exchange
insolvency or cyber intrusions.
Role of RBI and SEBI Coordination
11
A coordinated regulatory framework between the RBI and SEBI is crucial since
cryptocurrencies are both financial assets and potential securities. This supports the
recommendation made by the Supreme Court in Internet and Mobile Association of India v.
RBI 25, which promoted regulatory clarity without going too far. Although the RBI's mandate
appropriately focuses on currency issuance and macroeconomic stability, SEBI is better
equipped to oversee cryptocurrency exchanges and initial coin offerings (ICOs) due to its
background in capital markets and digital trading. Perhaps by a new law or revision to the SEBI
Act 1992, a joint coordination cell with explicit jurisdictional guidelines could stop businesses
from engaging in forum shopping and regulatory conflicts.
Integration with Banking Operations under Regulated Sandbox Models
A practical framework for regulated testing of blockchain and crypto-related banking services
is the RBI's Regulatory Sandbox Framework (2019). Regulators can monitor real-time risks
without upsetting the broader financial system by allowing a limited number of banks and fin-
techs to test blockchain-enabled remittances or smart contract-based lending in a secure legal
sandbox 26. Respondents to the interview also underlined that a sandbox approach would help
private banks regain trust, as many of them now avoid handling cryptocurrency transactions
because of concerns about compliance.
Digital asset companies can now grow legally thanks to the Monetary Authority of
Singapore's (MAS) integration of crypto innovation into a regulated sandbox system. India
might implement a similar system, maybe by testing blockchain remittances through public
sector banks in high-volume corridors like Singapore-India or UAE-India.
Conclusion
A new era of financial innovation has been brought about by the advent of cryptocurrencies,
but in India, this change is still hampered by regulatory hesitation and legal ambiguity. The
research finds that although the banking industry recognizes the disruptive potential of
cryptocurrency assets, the absence of a specific legal framework has resulted in significant
operational, compliance, and reputational risks. Banking industry interviews confirm that the
main obstacles to the adoption of cryptocurrencies are the ambiguity around taxation,
adherence to AML/KYC regulations, and consumer protection measures.
25
Internet and Mobile Association of India v Reserve Bank of India Supreme Court 2720, AIRONLINE 2020 SC
298
26
RBI, Enabling Framework for Regulatory Sandbox, 2019, para 4.
12
An inconsistent and reactive approach is shown by the examination of current legislative
frameworks, including RBI circulars and the provisions of the Income Tax Act. Financial
institutions are now vulnerable to lost opportunities and legal hazards due to the lack of a
uniform supervisory body or statutory recognition. Prominent rulings like Internet and Mobile
Association of India v. RBI 27 have highlighted the necessity of reasonable regulation as
opposed to outright bans.
The Indian banking sector must adopt reforms such as the creation of a specific crypto
legislation, coordination between the RBI and SEBI, AML/KYC enforcement, and strong
consumer protections in order to be prepared for the future. Safe integration can be tested using
a regulatory sandbox approach based on the RBI's 2019 framework.
India's banking industry has the potential to develop into a robust, crypto-inclusive financial
system that fosters innovation while preserving stability with careful legal intervention.
27
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15
