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Informist, Friday, Dec. 12, 2025

 

MUMBAI – India's approach towards stablecoins must be guided by caution and an appreciation of domestic imperatives, said Reserve Bank of India Deputy Governor T. Rabi Sankar. Stablecoins do not serve any purpose that cannot be served better by fiat money, he said.

 

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. "Beyond the facilitation of illicit payments and circumvention of control measures, stablecoins raise significant concerns for monetary stability, fiscal policy, banking intermediation, and systemic resilience," Sankar said at the Mint Annual BFSI Conclave 2025 on Friday.

 

Sankar detailed multiple risks to the use of stablecoins, such as currency substitution, undermining of monetary policy, weakening of capital account management, systemic risks. He also highlighted that stablecoins would lead to loss of seigniorage income.

 

"Stablecoins introduce real and severe risks ranging from monetary and fiscal disruption to banking disintermediation, to systemic instability. The risks are significantly higher for EMDEs (emerging market developing economies), but they are also major risks for AEs (advanced economies)," he said. "Understanding these vulnerabilities is critical before considering regulatory frameworks or policy adoption."

 

India's policy on stablecoins must be driven by domestic priorities, as it already benefits from a payments landscape comprising of systems such as unified payments interface, real-time gross settlement, and national electronic funds transfer, Sankar said. He further highlighted the importance of central bank digital currencies, saying those are digital tokens like stablecoins yet they are inherently superior since they satisfy all the attributes that money should have – fiat, single, trusted and representing value - and do not pose many of the risks associated with stablecoins.

 

"...stablecoins lack the basic attributes of money, their advantages are neither unique nor unambiguous and their risks are all too real," he said. The domestic factors and compulsions must be considered when evaluating policy options for stablecoins despite India having good macroeconomic conditions and sound policies, he said.

 

The Indian government and the RBI deem cryptocurrency as virtual digital assets and levies a 30% tax on cryptocurrency gains. Cryptocurrency transactions in India are also subject to 1% tax deduction at source.  End

 

Reported by Pratiksha

Edited by Ashish Shirke

 

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