India's central bank has reaffirmed a cautious approach to cryptocurrencies while actively promoting the development of tokenization, distributed ledger technology, and central bank digital currency projects. RBI Governor Sanjay Malhotra outlined the position at the Kautilya Economic Conclave in New Delhi on October 3, emphasizing concerns about monetary sovereignty, monetary policy stability, capital flow management, and the principle of 'singleness of money' within the financial system. The central bank's strategy focuses on supporting underlying technologies rather than embracing private digital assets that could disrupt established monetary frameworks. Malhotra specifically identified risks associated with private cryptocurrencies creating parallel monetary systems that might undermine sovereign control over money supply and financial stability, particularly in emerging economies with capital controls. He argued that India's existing fast and low-cost domestic payment infrastructure, primarily through UPI, already addresses domestic payment efficiency, leaving cross-border transactions as the more complex challenge. The central bank sees potential for regulated digital rupee systems and interconnected payment networks to improve international settlement mechanisms. While maintaining vigilance toward private crypto assets, the RBI continues developing regulated tokenization projects. Current initiatives include testing tokenized corporate bonds, certificates of deposit, and programmable digital rupee settlement systems through wholesale channels. A recent pilot with SEBI successfully launched Demat 2.0 for tokenized corporate bonds using distributed ledger infrastructure for securities records, while cash settlements occur via central bank money. In August, India expanded its digital rupee program to include targeted government benefit transfers in Chandigarh and Dadra and Nagar Haveli under the Pradhan Mantri Garib Kalyan Anna Yojana scheme. The RBI has also explored cross-border settlement possibilities, with discussions underway with Russia regarding CBDC-based trade mechanisms. Regulatory enforcement remains active, with the Financial Intelligence Unit issuing notices to 15 offshore crypto platforms in September for operating without proper registration under anti-money laundering requirements, regardless of physical presence in India. India's tax framework, effective April 1, 2026, continues to classify virtual digital assets under existing legislation, while compliance obligations for service providers persist without comprehensive crypto-specific legislation enacted to date.