RBI Governor Outlines India's Cautious Stance on Cryptocurrencies While Supporting Underlying Technologies

RBI Governor Sanjay Malhotra, speaking at the Kautilya Economic Conclave in New Delhi, stated that India supports the development of technologies underlying cryptocurrencies, such as distributed ledger technology and tokenisation, but maintains a cautious stance on cryptocurrencies themselves due to concerns over monetary sovereignty, capital flows, and monetary policy. He noted that cross-border payments represent a key area of concern and indicated that central bank digital currencies could be explored as an alternative. Malhotra also addressed rising global bond yields, attributing them to increased government and private sector spending, including AI-related expenditure, while reaffirming the RBI's focus on domestic growth and inflation.

Speaking at a Saturday event, Reserve Bank of India Governor Sanjay Malhotra outlined a dual-track position in which the central bank treads carefully around cryptocurrencies themselves while actively backing the spread of foundational technologies — distributed ledger systems and tokenisation among them. At the Kautilya Economic Conclave, Malhotra conveyed that the country backs advancement in the technologies underpinning crypto assets, pointing to distributed ledger systems and tokenisation as areas of particular interest. Wariness toward cryptocurrencies persists, rooted in concerns over monetary sovereignty, policy control, and the movement of capital — and the stated approach has centred on advancing the underlying technologies themselves, with deployment underway both within the central bank and through public-private partnership arrangements outside it. On the matter of cryptocurrency, the speaker noted that the stance taken had remained a measured one. Expanding on cryptocurrency-related concerns, Malhotra tied the matter to what he described as the "singleness of money," noting that economies operating under capital flow restrictions — particularly those in emerging markets — could face consequences for how monetary policy functions, while also pointing out that the core challenge being addressed relates less to domestic payment systems, which in many countries have become fast, affordable, and accessible, and more to other dimensions of the issue. Malhotra pointed to cross-border payments as the area demanding more immediate attention. Alternative payment mechanisms, among them central bank digital currencies, were put forward as potential avenues worth examining to tackle those kinds of difficulties. Addressing questions about rising public debt and tightening bond yields worldwide, Malhotra explained that the interplay of demand and supply was what ultimately drove movements in yields. Outlining a picture of tightening financial conditions, he attributed the upward pressure on bond yields and rising debt levels to a combination of expanded public expenditure and growing private-sector investment, with technology centred on artificial intelligence playing a notable part in driving that demand for capital. According to Malhotra, the RBI's approach to monetary policy centres on conditions within the domestic economy, including output trends and price pressures. Global borrowing costs carry consequences for India as well, particularly through their effect on domestic real interest rates — a factor he described as warranting careful attention.

RBI Governor Outlines India's Cautious Stance on Cryptocurrencies While Supporting Underlying Technologies

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RBI Governor Outlines India's Cautious Stance on Cryptocurrencies While Supporting Underlying Technologies

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