The Reserve Bank of India has said in a court filing that it had "ringfenced" financial institutions from dealing with digital assets over perceived risks, but hadn't banned cryptos.

“Firstly, the RBI has not prohibited VCs (virtual currencies) in the country. The RBI has directed the entities regulated by it to not provide services to those persons or entities dealing in or settling VCs. ... The RBI has been able to ringfence the entities regulated by it from being involved in activities that pose reputational and financial risks along with other legal and operational risks.”

The use of cryptos in illicit finance was specifically listed as a concern, with the RBI saying that means of anonymous cross-border transactions "have to be acted upon swiftly and stringently dealt with."