The Reserve Bank of India (RBI) released its latest Financial Stability Report (FSR) on 31 December 2025, highlighting the resilience of the Indian economy amid a volatile global political and economic landscape. Among its key features is a dedicated special chapter on stablecoins titled “Financial stability implications of stablecoins”. The inclusion of this chapter is notable, reflecting the growing importance of stablecoins within global financial systems and the regulatory scrutiny they continue to attract.
The GENIUS Act introduces multiple safeguards for stablecoins issued by non-government entities. These include clarity on the nature of such instruments as payment stablecoins rather than securities or commodities, consumer protection measures such as a requirement to maintain 1:1 reserves in cash or deposits, and bankruptcy protections that exclude reserve assets from the issuer’s bankruptcy estate while granting priority to stablecoin holders.
With nearly 99 percent of stablecoins denominated in the USD, and with the regulatory clarity provided by the GENIUS Act, the adoption of stablecoins is expected to grow exponentially and define the new-age cross-border payments ecosystem. Many banks, financial institutions and fintech companies in the United States are already gearing up for the issuance and trading of payment stablecoins, which may significantly influence global payment flows.
Another dominant concern expressed by the RBI with respect to stablecoins is the principle of the singleness of money. In a robust financial system, one rupee issued by a commercial bank must be interchangeable with one rupee issued by the central bank. Privately issued stablecoins, offered by various entities with varying degrees of transparency and creditworthiness, threaten this principle. As tradable instruments, stablecoins have also exhibited deviations from their pegged assets or currencies during periods of market stress, potentially leading to a fragmentation of the payment system and encouraging disintermediation from regulated financial institutions.
At the same time, one cannot turn a blind eye to the technological efficiencies associated with blockchain-based payment systems. Stablecoins demonstrate the potential for faster settlement, improved efficiency and reduced reliance on centralised intermediaries. Recognising this, recent statements by India’s Finance Minister have emphasised the importance of engaging with the broader digital asset ecosystem, while also underscoring the need for global coordination and policy alignment.
In this context, India’s policy choices appear to be shaped by the need to balance innovation with financial stability. While private issuance of stablecoins raises complex questions, the development of a Central Bank Digital Currency (CBDC) offers an alternative pathway for leveraging blockchain technology within a regulated and sovereign framework. A carefully designed CBDC may allow India to harness the benefits of digital payments while preserving monetary control and systemic safeguards.
As stablecoins continue to gain traction globally, India’s engagement with this evolving ecosystem is likely to remain measured and deliberative. The path forward may lie not in immediate legitimisation, but in calibrated engagement, regulatory clarity, and alignment with broader macroeconomic objectives.
Smita Jha, Partner, Khaitan & Co Diksha Singh, Principal Associate, Khaitan & Co
First Published: Feb 06, 2026, 16:08
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