India's Potential Stablecoin Policy Framework
India's government is reportedly considering the introduction of a formal policy framework for stablecoins, which could be unveiled in its upcoming Economic Survey for 2025–2026. This potential development signifies a notable shift from years of uncertainty surrounding digital assets in the country. According to reports from MoneyControl, the Ministry of Finance is anticipated to present its official stance on stablecoins within this annual survey, a document that typically outlines the government's policy priorities for the ensuing fiscal year. If this materializes, it would represent the most significant indication to date that New Delhi is preparing to transition from a position of general skepticism toward the establishment of regulated digital-asset frameworks, particularly for tokens that are backed by fiat reserves.
For India, a nation recognized as the world's most populous country and a pivotal global hub for payments, the implementation of stablecoin regulations would constitute a substantial strategic pivot. However, there appears to be a divergence in approach, as the Reserve Bank of India (RBI) has not fully aligned with this proposed direction. RBI Governor Sanjay Malhotra reiterated the central bank's "cautious" perspective on Thursday, stating that while the government will ultimately make the final decision, the central bank remains apprehensive about the inherent risks associated with crypto assets. "We have a very cautious approach towards crypto because of various concerns that we have," Malhotra remarked at the Delhi School of Economics. He further added, "There is a working group which was set up earlier, and they will make a final call as to how, if at all, crypto is to be handled in our country."
Investor Takeaway
The establishment of a formal stablecoin framework would mark India's most significant stride toward the legalization of digital assets. Nevertheless, the RBI continues to prioritize risk containment and the expansion of its central bank digital currency (CBDC) as its primary focus.
RBI's Stance: Crypto's Perceived Redundancy in India's Payment Landscape
Governor Malhotra countered the notion that India should emulate the stablecoin innovations emerging from the United States, including the recent passage of the GENIUS Act. He contended that the U.S. is essentially playing catch-up in terms of payments infrastructure, whereas India already possesses a multitude of fast and low-cost systems that effectively serve its population. India's robust payments ecosystem comprises several key components:
- •Unified Payments Interface (UPI): This is a round-the-clock instant payments network that has achieved widespread adoption for both retail and business transactions.
- •National Electronic Funds Transfer (NEFT): This system facilitates hourly settlements and is available at all hours.
- •Real-Time Gross Settlement (RTGS): This platform is designed for the settlement of high-value payments in real time.
In light of these existing sophisticated payment mechanisms, the RBI argues that stablecoins do not address a fundamental problem within India's domestic payments ecosystem. Instead, the central bank is directing its efforts toward the expansion of its central bank digital currency (CBDC), which it views as a more secure and advantageous alternative for programmable payments and wholesale settlement operations.
The Significance of Stablecoin Regulation for India
For an extended period, India has maintained a stance that has fluctuated between skepticism and outright opposition concerning cryptocurrencies. Numerous draft legislative proposals have advocated for outright bans or stringent restrictions, and existing taxation rules have imposed substantial penalties on cryptocurrency trading activities. Despite these deterrents, India has consistently ranked among the largest global markets for crypto users. The introduction of a stablecoin framework would signify several key advancements:
- •Regulatory legitimacy: The implementation of clear rules would signal a departure from treating digital assets solely as a threat, indicating a move towards acknowledgment and integration.
- •Institutional engagement: Financial institutions, including banks, would be empowered to explore and develop tokenized cash models, fostering innovation within the traditional financial sector.
- •Market acceleration: The legitimization of stablecoins could serve as a catalyst for increased adoption and potentially lead to a rise in cryptocurrency asset prices within the region.
This potential policy shift would align India with other nations in Asia and the Middle East that are actively establishing regulated environments for fiat-backed tokens, which are increasingly being utilized for payments, settlements, and treasury operations.
Persistent Skepticism Towards Unbacked Crypto Assets
Even as policymakers contemplate the introduction of stablecoin regulations, a segment of Indian officials continues to express reservations regarding the value and utility of non-stablecoin crypto assets. In October, Commerce Minister Piyush Goyal articulated the government's position, stating that it neither actively encourages nor discourages cryptocurrencies. However, he voiced doubts about the intrinsic value of most tokens, citing their lack of sovereign backing or underlying tangible assets. This skepticism persists even though India is a significant contributor to global crypto transaction volumes. The primary concerns voiced by the government have revolved around:
- •Volatility: The inherent price fluctuations of cryptocurrencies pose a risk to investors and the broader financial system.
- •Capital-flight risk: The potential for large sums of money to rapidly exit the country through unregulated crypto channels is a significant concern.
- •Consumer protection gaps: The absence of robust safeguards leaves consumers vulnerable to fraud and market manipulation.
- •Money-laundering exposure: The potential for cryptocurrencies to be used for illicit financial activities remains a key focus for regulatory bodies.
Concurrently, blockchain analysis firm Elliptic has estimated that North Korean hackers alone have illicitly acquired over 2 billion dollars in cryptocurrency during 2025. This statistic continues to amplify security-driven concerns within global policy-making circles.
Investor Takeaway
While India's potential stablecoin regulations might pave the way for broader digital asset adoption, widespread acceptance of non-stablecoin cryptocurrencies is unlikely to materialize unless significant reductions in volatility, security risks, and capital-flow uncertainties are achieved.
Future Outlook for India's Digital Asset Policy
The forthcoming Economic Survey is poised to serve as the initial discernible indicator of India's evolving policy direction regarding digital assets. Should stablecoin regulations be included in this document, it could pave the way for formal legislative proposals to be introduced in 2026. In the interim, the RBI is committed to continuing its expansion of CBDC pilot programs and reinforcing India's digital payments infrastructure—areas where the central bank perceives India as a global frontrunner. For market participants, a critical question remains: will India opt to classify stablecoins as regulated financial instruments, akin to existing e-money regulations, or will it implement a more tightly controlled framework that limits their commercial utility? Regardless of the specific approach adopted, this ongoing debate represents a pivotal transition for one of the world's largest and most rapidly expanding economies.