Policy Overview

India’s finance ministry has sharpened its position on stablecoins, calling for global coordination that preserves monetary sovereignty while acknowledging the utility of tokenized money for payments and remittances. Finance Minister Nirmala Sitharaman outlined a three-part framework:

1. Safeguard India’s monetary and payment stability.
2. Protect household savings through strong disclosure and reserve rules.
3. Align with international standards so issuers can’t exploit regulatory loopholes.

Key Themes

1. Global Consistency

New Delhi linked its approach to international workstreams:

• IMF–FSB framework for cross-border crypto oversight.
• FATF travel-rule standards for AML/CFT compliance.

India advocates uniform reserve, disclosure, and redemption rules worldwide—daily transparency, high-quality liquid assets, third-party attestations, and fixed redemption timelines—to prevent hidden contagion from foreign issuers.

2. Domestic Oversight Model

Regulators outlined a multi-agency map:

• Reserve Bank of India (RBI): guardrails for monetary and payment stability.
• SEBI-style markets watchdogs: issuer disclosure, distribution, and investor protection.
• Data-protection authorities: custody and privacy compliance.

Two red lines:

• No “dollarization by app” that shifts control of money supply offshore.
• No commingled or leveraged reserves that threaten 1:1 backing.

If licensed, issuers may need local reserve custody, ring-fenced assets, and priority redemptions to shield users from insolvency cascades.

3. Integration With India’s Digital Stack

Stablecoins must interoperate with India’s Digital Public Infrastructure:

• UPI and RuPay rails already process near-zero-cost payments.
• RBI’s retail CBDC (e-rupee) pilot explores programmable and offline modes.
  Permissible tokens could plug into these networks for cross-border remittances, corporate settlements, and on-chain treasury flows—but only through licensed entities with strict KYC/AML controls.

4. Enforcement & Consumer Protection

• Crackdowns will continue on unlicensed offshore platforms.
• Advertising must avoid framing stablecoins as “risk-free deposits.”
• Licensed distributors may face user-level caps, suitability checks, and wallet surveillance.
• Exchanges must freeze illicit flows when ordered and publish breach reports for transparency.

Macro Context

Sitharaman framed stablecoin policy within a world of rising debt and volatile capital flows, where private dollar tokens already dominate crypto trade settlement. India wants the efficiency of tokenized dollars without importing U.S. monetary policy or exposing its citizens to opaque offshore risks.

Bottom Line

India isn’t banning stablecoins—it’s boxing them in.
The finance ministry backs globally harmonized rules that enforce:

• Full-reserve transparency
• Independent attestations
• Robust redemption rights
• Strict AML/CFT compliance

Stablecoins may coexist with UPI and the e-rupee if they play inside this regulated perimeter. The message is clear: India seeks the speed of tokenized money without surrendering monetary autonomy.