Regulating Stablecoins in India
As it prepares its Economic Survey for the fiscal year 2025-2026, the Indian government is contemplating the possibility of regulating stablecoins, according to insiders. This potential regulation signifies a shift in perspective, as the Reserve Bank of India (RBI) maintains a more conservative stance on cryptocurrencies and continues to advocate for the implementation of a central bank digital currency (CBDC).
Examination of Stablecoins
Reports from MoneyControl, citing an official aware of the discussions, indicate that the Ministry of Finance’s annual report will feature a comprehensive examination of stablecoins. RBI Governor Sanjay Malhotra emphasized at a recent event at the Delhi School of Economics the need for a cautious approach toward cryptocurrency, citing various concerns that prompt caution. He noted:
“The ultimate decision rests with the government. A previously established working group is tasked with determining how, if at all, cryptocurrencies should be addressed in India.”
India’s Digital Payment Systems
Malhotra responded to recent advancements in stablecoin frameworks, particularly following the US GENIUS bill, by arguing that India’s established digital payment systems—such as the Unified Payments Interface (UPI), the National Electronic Funds Transfer (NEFT), and the Real-Time Gross Settlement (RTGS) system—offer a solid foundation for its digital transaction ecosystem, negating the necessity to rush into stablecoin regulation.
Potential Shift in Crypto Sentiment
Should the Indian government proceed with regulating cryptocurrencies, it would represent a notable shift from its longstanding anti-crypto sentiment, thereby enhancing the legitimacy of digital assets within the nation. This could lead to increased adoption and potential appreciation in crypto asset values.
Skepticism About Cryptocurrencies
Nevertheless, doubts persist among officials regarding the viability of uncollateralized cryptocurrencies. Commerce and Industry Minister Piyush Goyal recently remarked that the government adopts a neutral posture towards cryptocurrencies, yet expressed skepticism about their legitimacy as an asset class due to the lack of government backing and inherent value in most cryptocurrencies.
