Will India accept stablecoins? Finance Minister Sitharaman hints at policy change

Digital currencies are changing the way the world deals with money, and stablecoins are emerging as an important innovation that countries can no longer ignore. These cryptocurrencies are pegged to traditional assets such as the US dollar, offer faster and borderless transactions, and are gaining traction among businesses and investors around the world.

Will India change its virtual currency policy?

India has always been cautious in its approach to cryptocurrencies, but it may now be considering a change in stance.

Finance Minister Nirmala Sitharaman recently said countries must be prepared to “get involved” in stablecoins whether they like it or not, highlighting the growing influence of digital currencies on the global financial system.

Speaking at the Kautilya Economic Conference, she said innovations like stablecoins are changing the way money and capital moves around the world. He warned that countries could face a clear choice: adapt to these new financial systems or risk being left behind. He also emphasized that these changes show how much change is occurring in the financial world.

“No country can protect itself from systemic change. Whether we welcome these changes or not, we must be prepared to address them.” she said.

Her comments suggest that India may be rethinking its approach to cryptocurrencies while keeping a close eye on how the digital economy evolves.

India’s approach to virtual currency

Reuters recently reported that India plans to avoid full regulation of cryptocurrencies for the time being. The government intends to maintain partial oversight and is concerned that fully integrating digital assets into the financial system could pose systemic risks.

Back in 2021, India reversed its plan to ban private digital assets. During its G20 Presidency in 2023, it promoted the creation of a global framework to regulate virtual currencies. The 2024 discussion paper has been postponed as the government waits to see how other countries approach these assets.

While the RBI continues to warn about cryptocurrency risks, India’s market regulator SEBI has taken a more liberal stance in regulating digital assets.

Global stablecoin development

While India has signaled a change in position, countries around the world are moving rapidly to develop rules for stablecoins. The United States recently passed the GENIUS Act, which establishes a stablecoin framework.

In May, Hong Kong approved a stablecoin bill that would create a licensing system for companies that issue fiat-backed stablecoins. Japanese startup JPYC also announced plans to issue its first yen-backed stablecoin later this year.