India’s stablecoin debate has stalled into what industry leaders call an ownership crisis, leaving banks unwilling to act and the country sidelined as regional rivals move forward. Polygon Labs’ Global Head of Payments & RWAs, Aishwary Gupta, estimates that integrating stablecoins into cross-border payments could save India about $68 billion a year — but without regulatory clarity banks say they won’t implement the infrastructure.
Gupta says the paralysis is bureaucratic: multiple ministries and agencies — including the Ministry of Finance, the Ministry of Electronics & Information Technology, the Centre for Development of Advanced Computing, the Central Board of Direct Taxes and the Financial Intelligence Unit — all touch crypto policy but none want to take lead responsibility. That diffusion of ownership has stalled practical choices and raised a simple operational question for banks: what is the RBI’s stance?
Banking executives told Gupta they are ready to adopt cost-cutting stablecoin rails once the Reserve Bank of India issues clear guidance. In contrast, regulators elsewhere have acted: the U.S. passed the GENIUS Act enabling banks to issue dollar-backed tokens, while Hong Kong, Singapore, Thailand and Dubai have dedicated authorities and rules for stablecoin issuance.
Not everyone favors rapid adoption. Suraj Sharma, Head of India (Legal & Compliance) at Gate.io, warns of real risks including monetary sovereignty, capital flight and systemic implications from unregulated stablecoin flows. Until policymakers distinguish use cases — remittances, B2B settlements, on-chain FX — many in financial compliance see more risk than reward.
Brain drain: The regulatory vacuum has already driven talent overseas. Gupta estimates 80–85% of India’s top crypto developers and experts have relocated. Despite collecting about $5.2 million through crypto taxation, India lacks rules that would protect users and allow startups to scale locally.
Regional peers are racing ahead with yen- and won-pegged projects, Hong Kong’s stablecoin ordinance, and pilot plans in China — reinforcing the view that stablecoins are now part of a geopolitical competition for digital finance. Some suggest middle-ground options for India, like wrapped CBDC tokens or ERC-compliant representations of a digital rupee for cross-border activity, preserving capital controls while enabling innovation.
Policy clarity will determine whether India recovers lost opportunity in payments and tokenized finance or continues to cede ground to better-regulated neighbors. Risk: unresolved policy raises compliance and macro risks that could affect monetary stability and capital controls if not addressed.
Source: Decrypt. Read the original coverage for full details.