The central government is mulling to “experiment” with stablecoins—a form of cryptocurrency—before allowing them to be used for the purpose of transactions, Moneycontrol has learnt.
In the Economic Survey for 2025-26, the government might “present a case” for the recognition of stablecoins as a form of legal tender for certain transactions, a government official aware of the matter said.
Stablecoins are a type of cryptocurrency whose value is pegged to another asset, such as a fiat currency (like the US dollar) or a commodity. Their primary purpose is to maintain a stable price, unlike other cryptocurrencies like Bitcoin and Ethereum, which are highly volatile.
“We need to be in sync with the developments happening around the world. So, we need a framework to deal with stablecoins,” the official said. “But first, we have to check its utility, and see if the banking system is equipped to handle transactions of stablecoins."
In October, at the Kautilya Economic Conclave, Finance Minister Nirmala Sitharaman had said that “innovations like stablecoins are transforming the landscape of money and capital flows.”
“These shifts may force nations to make binary choices: adapt to new monetary architectures or risk exclusion,” she had said.
As of today, there is no regulatory framework for cryptocurrency, and it’s not recognized as a legal tender. The government has prepared a discussion paper on crypto, but it’s not yet out in public.
Moneycontrol had reported in June that the paper is expected to underline potential technological benefits of cryptocurrency, especially for stablecoins, without taking a definitive stand on regulation.
The paper will have use-cases, and will take cues from the United States’ legislation. The paper would suggest different treatment for different crypto assets like bitcoin, stablecoins and the rest; and highlight whether to regulate stablecoins as a part of global payments, an official had said earlier.
The United States, in July, introduced the Guiding and Establishing National Innovation for US Stablecoins Act, or the GENIUS Act, to establish a regulatory framework for dollar-backed payment stablecoin issuers that can help stablecoin payment companies, traditional financial institutions, and consumers navigate with the currency with more clarity.
At the CII-Financing Summit in Mumbai, on November 17, the payments sector argued that fiat-backed stablecoins could modernise cross border transfers, while capital market stakeholders warned that it may weaken regulatory oversight.
Visa’s Group Country Manager Sandeep Ghosh said that stablecoins could bring scale, speed and lower costs to remittances and cross-border payments. But NSE CEO Ashish Chauhan noted that this form of cryptocurrency could undermine the prevention of money laundering framework, and expose markets to manipulation.
In October, RBI Governor Sanjay Malhotra had urged other central banks to use and promote Central Bank Digital Currencies (CBDCs) instead of stablecoins to facilitate international payments.
CBDC is the legal tender issued by a central bank in a digital form. It’s a digital rupee, issued and regulated by the RBI. The central bank is currently conducting pilot projects of two types of CBDCs – retail and wholesale.
While speaking at an event in US, Malhotra had reiterated RBI’s stance on cryptocurrencies, saying their usage had implications for monetary policy, capital account flows, and money laundering.
Experts say that stablecoins are a form of cryptocurrency with their volatility being directly correlated to the underlying asset that they are pegged to. Since, it’s a form of collaterization, it should be treated as a speculative asset instead of a legal tender and thereby the associated regulations need to stem from it.
“It would be useful to create a sandbox environment for the same under the Department of Financial Services to understand the risks that emanate from it, post which the regulatory environment can be defined for them,” Vivek Iyer, Partner, Grant Thornton Bharat.
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