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Informist, Monday, Dec. 29, 2025

 

NEW DELHI – Maintaining its usual caution against stablecoins and cryptocurrency in general, the Reserve Bank of India Monday said the increasing adoption of stablecoins raises concern for both monetary policy and financial stability, particularly in emerging market developing economies like India as their widespread use can weaken central banks' control over money supply and interest rates.

 

"Proliferation of stablecoins also creates risk of currency substitution, weakening the effect of monetary policy transmission and banking disintermediation," it said in its annual report titled 'Trend and Progress in banking 2024-25 (Apr-Mar)'. Stablecoins are a form of cryptocurrency whose value is pegged to another asset, such as a fiat currency or gold, to maintain a stable price.

 

Market capitalisation of stablecoins, which the central bank said have become "a key component of the digital asset ecosystem" reached approximately $300 billion at the end of September, the report said. 

 

Indian government as well as the central bank have both maintained their guard against the rising popularity of cyrptocurrency. On multiple occasions, they have increasingly pushed for the use of central bank digital currency as a superior alternative to cryptocurrency should one want to foray into the digital assets space. 

 

Finance Minister Nirmala Sitharaman had said in October that innovations like stablecoins are transforming the landscape of money and capital flows with these shifts forcing nations to make binary choices, adapt to new monetary architectures or risk exclusion. "They also remind us that no nation can insulate itself from systemic change. Whether we welcome these shifts or not, we must prepare to engage with them," she had said. 

 

According to the report, policymakers remain attentive to risks from leverage, liquidity mismatches, and cross-border spillovers, even as financial innovations like stablecoins and the use of artificial intelligence reshape market structures and supervisory practices. "In this environment, strengthening of financial sector regulation and supervision remains crucial for financial stability," it said. 

 

The central bank said that stablecoins are evolving under formal regulatory oversight in few jurisdictions that have put in place regulations to safeguard investors but global stablecoin regulation remains fragmented. "...cross-border coordination is inadequate, hindering effective oversight and timely responses to systemic risks," it said.  End

 

US$1 = INR 89.98

 

Reported by Priyasmita Dutta

Edited by Akul Nishant Akhoury

 

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