India is holding back from enacting a comprehensive cryptocurrency law, choosing instead to maintain partial oversight due to concerns about systemic risks, according to an internal government document reviewed by Reuters. Authorities caution that formal regulation would legitimize digital assets and risk embedding them into the financial system, while an outright ban would fail to stop peer-to-peer or decentralized exchange activity. The Reserve Bank emphasized the difficulty of containing such risks within traditional oversight mechanisms. The document highlights that U.S. legislation enabling dollar-backed stablecoins could reshape global payments, warning that widespread use of stablecoins may fragment settlement systems and weaken India’s unified payment interface. Although Indian investors currently hold about $4.5 billion in crypto, officials state that holdings remain too small to endanger financial stability. Heavy taxation and compliance requirements continue to discourage speculative trading.