RBI flags crypto risks as panel meets on July 2, 2026

Why crypto regulation is back before Parliament

India’s cryptocurrency debate has returned to Parliament’s agenda, with the Standing Committee on Finance scheduled to take evidence from the Reserve Bank of India (RBI) on July 2, 2026 in New Delhi. The sitting is part of a structured review on “A Study on Virtual Digital Assets (VDAs) and Way Forward”. The committee is examining how India should handle cryptocurrencies, exchanges, stablecoins, investor protection, taxation, and compliance risks.

The renewed focus comes at a time when India taxes crypto but has not granted it any legal-tender status. Several stakeholders have been consulted in earlier sittings, and the RBI’s appearance is being treated as a key moment in the current round of consultations. The committee chair, Bhartruhari Mahtab, has also publicly reiterated that the central bank does not support giving legal status to VDAs.

RBI’s core message: don’t legalise VDAs now

According to information shared around the committee’s discussions, the RBI has told the Standing Committee on Finance that cryptocurrencies and other virtual digital assets can be a threat for an emerging economy like India. The central bank’s position, as conveyed to the panel, is that these assets should not be given legal recognition at this stage.

RBI has flagged that VDAs could be used for terrorism financing, narcotics trafficking, and other unlawful financial activities. It has also maintained that risks around money laundering and terror financing remain central concerns. In the committee’s post-meeting briefing, chair Bhartruhari Mahtab said the RBI is not in favour of giving VDAs legal status in India.

What the July 2 session is expected to cover

The July 2 meeting is framed as an “oral evidence” session with RBI representatives on the VDA study. The discussion is expected to cover the future regulatory framework for crypto assets and the concerns regulators have raised on financial stability, monetary policy, and consumer protection.

The agenda, as described in the consultation notes, includes investor protection, taxation, financial stability, and the future direction of crypto regulation in India. The panel is also looking at how the broader policy should evolve when India still lacks a single, comprehensive crypto law that clearly sets out licensing, market conduct, asset classification, stablecoin treatment, custody rules, and investor safeguards.

India’s current position: taxable, but not legal tender

India currently classifies cryptocurrencies as Virtual Digital Assets (VDAs). The framework in force is largely tax-led rather than a full market regulation law. The country levies a flat 30% tax on crypto profits and 1% tax deducted at source (TDS), even though VDAs do not have legal-tender status.

Some members of the panel have questioned how a 30% tax is being levied when there is no dedicated crypto policy. The committee has also indicated it is reviewing income-tax provisions related to VDAs. Sources have also pointed to crypto remaining a legal grey area, with taxation and certain compliance requirements doing most of the regulatory work.

RBI’s risk lens: illicit finance and systemic concerns

RBI’s warnings to the committee focus heavily on misuse risks, including terror financing and drug trafficking. In addition, the central bank has repeatedly cautioned about risks to financial stability, monetary policy, and consumer protection.

The cautious stance was also echoed publicly in November 2025 when RBI Governor Sanjay Malhotra said, “Stablecoins, cryptos, they have a huge risk, and so we are adopting a very cautious approach towards it.” This statement has been cited as consistent with the RBI’s longstanding position against recognising private digital currencies.

How the committee is building its record

The July 2 sitting is part of a broader evidence-gathering exercise rather than a decision meeting. A senior official has confirmed that while the Standing Committee on Finance can make recommendations on cryptocurrency regulation, those recommendations are not legally binding on the government. The government retains discretion on whether to act on them.

The panel’s consultation process has included multiple sittings with crypto exchanges and enforcement and tax authorities. The RBI’s testimony is being described as its first direct presentation to the committee in the current round of consultations. A separate interaction with ICAI has also been scheduled in the process, including discussion points linked to accounting standards and treatment of VDAs.

What this means for investors and compliance today

For investors, the current situation is clear on taxation but unclear on a broader legal framework. VDAs are taxable, but they are not legal tender. The absence of a comprehensive law means key issues such as licensing, market conduct, custody expectations, and formal investor safeguards remain under examination.

For the industry, the policy environment continues to be shaped by taxation, anti-money laundering registration, and enforcement actions, rather than a single crypto market law. The committee’s review could inform future policy recommendations, but the July 2 session itself is positioned as an oral evidence sitting, not a vote.

Key facts at a glance

Recent context around enforcement and scrutiny

The committee’s fresh engagement is taking place amid wider scrutiny of the crypto ecosystem. Consultation notes also reference a likely backdrop of the Enforcement Directorate’s Rs 2,500 crore crypto-FEMA probe being discussed in the broader public discourse.

While the committee has heard several stakeholders in prior sittings, lawmakers have indicated that understanding each stakeholder’s viewpoint is necessary before finalising recommendations. The chair has said the committee will hold further meetings on the subject as deliberations continue.

What happens next

After the July 2 evidence session, the committee is expected to continue consultations and then draft its report with recommendations on the future course of action. No final regulatory framework has been approved so far, and India still does not have a complete crypto law.

Any next steps on licensing, investor protection rules, or the treatment of stablecoins would depend on how the government responds to the committee’s recommendations. For now, the clearest operational rules remain the tax provisions and the RBI’s stated opposition to granting legal status to VDAs at this stage.