Core Viewpoint - India is leaning towards not creating legislation to regulate cryptocurrencies, opting for partial oversight due to concerns about systemic risks associated with integrating digital assets into the mainstream financial system [1][3][4] Regulatory Environment - The Reserve Bank of India (RBI) believes that regulating cryptocurrencies to contain their risks would be challenging in practice [1][3] - India previously prepared a bill to ban private cryptocurrencies in 2021 but did not proceed with the legislation [4] - During its G20 presidency in 2023, India called for a global framework to regulate cryptocurrencies, but plans to issue a discussion paper on its stance have been deferred until after the U.S. formalizes its cryptocurrency regulations [5] Global Context - Global acceptance of cryptocurrencies has improved, particularly in the U.S., where legislation has been passed to allow wider use of stablecoins [2] - Other countries like China continue to ban cryptocurrencies but are considering stablecoins, while Japan and Australia are developing cautious regulatory frameworks [3] Current Market Dynamics - Global crypto exchanges can operate in India after registering with a government agency, which conducts due diligence to mitigate money laundering risks [5] - The RBI has consistently warned about the risks associated with cryptocurrencies, leading to a near freeze in trading between the formal financial system and cryptocurrencies [6]