Cryptocurrencies have become a major topic of discussion in global financial markets. With the expansion of digital technology, a large segment of investors views them as the currency of the future, but India’s central bank does not entirely agree with this notion. The RBI believes that cryptocurrencies could pose a threat to economic stability.

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Why the RBI Rejected Recognizing Crypto as Real Currency

At the Mint Annual BFSI Conclave 2025, Deputy Governor T. Rabi Sankar clearly stated that cryptocurrencies are not real money. According to him, the credibility of any currency rests on the trust placed in a sovereign institution, while cryptocurrencies lack such institutional support. They are neither backed by a promise of payment nor do they have an official issuer.

Speculative Value is the Biggest Weakness

The RBI says that the value of cryptocurrencies depends entirely on speculation. Their fluctuations are determined not by any economic fundamentals but by market sentiment. This is why those who invest in them face the risk of significant losses.

Fundamental Difference Between Rupee and Crypto

Rabi Sankar explained, using an example, that the Indian Rupee is backed by the guarantee of the RBI and the Government of India. People’s trust is what makes a currency valuable. In contrast, cryptocurrencies lack such a trustworthy foundation, which is why they cannot be given the status of a currency.

Cryptocurrencies Run on Blockchain

Cryptocurrencies operate on decentralized blockchain networks, outside the control of the central bank. While this system is technologically innovative, it has several serious flaws from an economic perspective. Currently, there are no clear regulations regarding cryptocurrencies in India. Although trading is not illegal, the taxes levied on it have become a major challenge for investors.

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Government Will Decide on a Complete Ban

The RBI has indicated that the option of a complete ban on cryptocurrencies remains open, but the final decision will be taken by the central government after discussions with all relevant stakeholders. Given the growing number of young investors, this issue is likely to become even more important in the future.