Crypto currency: Investors should not ignore these warnings of RBI on crypto currency, otherwise they may get ruined
RBI’s Repeated Warnings on Cryptocurrency: Why Ignoring Them Could Prove Disastrous for Indian Investors
Cryptocurrency in India: Despite rising popularity across India, cryptocurrencies continue to remain a high-risk and unregulated asset class. The Reserve Bank of India (RBI) has consistently cautioned investors, highlighting serious concerns around money laundering, terror financing, tax evasion, and investor safety
A recent case from Kanpur underlines how vulnerable investors can be in an unregulated environment. Retired banker Anil Singh Chauhan reportedly lost ₹2.52 crore in less than a month
His entire life savings, loans, and even family jewelry were wiped out. With no regulatory body to protect him, Chauhan has little legal recourse beyond filing an FIR — a situation faced by many victims across the country.
India currently has no formal regulatory framework for cryptocurrencies. Unlike equities that fall under SEBI’s strict oversight, crypto exchanges operate without licenses, standardized KYC, or investor protection norms.
In 2022, the government imposed a 30% tax on crypto profits and 1% TDS on transactions, which many interpreted as indirect legitimacy. However, critics argue this move exposed investors to risks without offering them any safeguards.
RBI Governor Sanjay Malhotra has reiterated that crypto is neither a currency, nor an asset, nor something that deserves legitimacy. According to RBI, the absence of control makes it impossible to secure investors against fraud, hacking, or manipulation.
Why RBI Calls It a “Speculative Casino”Despite being marketed as “the currency of the future,” RBI officials describe cryptocurrency as a high-stakes gambling arena
Key risks highlighted by RBI include:
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Terror Financing: Use of crypto for illegal cross-border transactions.
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Money Laundering: Difficult-to-trace digital transfers aiding criminal activity.
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Tax Evasion: Investors bypassing tax obligations due to lack of oversight.
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No Consumer Protection: Fraud victims rarely recover their losses.
Unlike India’s wait-and-watch approach, major economies have enforced strict rules:
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European Union (EU): Mandatory disclosures, reserve funds, and anti-money laundering compliance.
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United States: Regulatory lawsuits and penalties imposed on non-compliant crypto intermediaries.
India, however, remains in a grey zone — neither banning nor properly regulating crypto. This uncertainty leaves millions of retail investors exposed to scams and market crashes.
A Growing Obsession in Smaller CitiesInterestingly, crypto trading in India is no longer limited to metro cities. Reports show that Tier-2, Tier-3, and even smaller towns are witnessing increasing adoption. Unfortunately, financial literacy in these regions remains low, making small savers easy prey for fraudulent schemes.
Experts believe India must urgently make a decision — either completely ban crypto trading or introduce strict regulations with licensing, mandatory KYC, disclosure norms, and consumer protection mechanisms.
Without action, the situation could worsen. In a country where financial awareness is still developing, cryptocurrencies may simply act as a sophisticated form of gambling disguised under blockchain technology
The RBI’s warnings should not be taken lightly. Investors chasing quick profits in the unregulated crypto market are gambling with their financial security. Unless India implements strong regulations or enforces a complete ban, stories like Chauhan’s may continue to multiply.
For now, the message is clear: crypto in India remains a dangerous bet, where the odds are stacked against small investors.