The Reserve Bank of India (RBI) has recommended a 'ring-fencing and prohibition' approach to managing crypto assets, according to a report by the Economic Times. In its submission to the Parliamentary Standing Committee on Finance, the RBI emphasized that banning remains a crucial option within the international regulatory framework. The central bank suggests isolating regulated financial institutions, such as banks, from crypto assets and privately issued stablecoins. The RBI warned that regulating these assets like traditional financial products could create a false sense of security for highly speculative products with no real economic benefit, potentially posing financial stability risks. Additionally, the RBI highlighted that widespread use of stablecoins could undermine monetary sovereignty, disrupt monetary policy transmission, and fragment payment systems, advocating for the strengthening of national digital payment infrastructure through central bank digital currencies (CBDCs).