- Reserve Bank of India Deputy Governor T Rabi Sankar warned stablecoins pose macroeconomic risks
- Sankar said stablecoins offer no benefits beyond what fiat money provides and raise systemic concerns
- India, Japan, and the EU have chosen to diverge from the US approach on stablecoin regulation
Reserve Bank of India's (RBI) Deputy Governor T Rabi Sankar has warned that stablecoins pose major macroeconomic risks and rejected claims of their utility. He asserted they “do not serve any purpose fiat money cannot,” according to Reuters.
In a speech in Mumbai, Sankar cautioned that while stablecoins have gained momentum, particularly after US legislation legitimised dollar-pegged tokens with a combined market cap surpassing $300 billion, a cautious stance remains essential in India.
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On Stablecoins
“Stablecoins do not serve any purpose fiat money cannot,” he emphasised. He added, “Beyond the facilitation of illicit payments and circumvention of capital measures, stablecoins raise significant concerns for monetary stability, fiscal policy, banking intermediation, and systemic resilience.”
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Sankar noted that while a US regulatory framework has propelled stablecoins into widespread use, India, along with other major economies such as Japan and the European Union, has opted for divergence. He added that introducing such assets into mainstream financial infrastructure could elevate systemic risks.
The RBI Deputy Governor went on to question stablecoins' touted advantages, saying, “Such tokens are yet to establish the benefits their proponents claim and remain inferior to fiat money,” reinforcing India's intention to maintain a cautious approach.
Sankar contrasted stablecoins with central bank digital currencies, stating, “CBDCs are inherently superior to stablecoins”. India's own retail and wholesale CBDC pilot already counts approximately seven million users.
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He further dismissed private cryptocurrencies, asserting, “Cryptocurrencies have no intrinsic value. Since they do not have any underlying cash flows, they are not financial assets as well.”
Under India's current regulatory framework, local crypto exchanges must register with a government agency tasked with anti-money laundering compliance.
Crypto gains remain taxable, and the sector has observed increased adoption beyond major metropolitan regions. Sankar stressed that India must engage all relevant stakeholders before deciding to prohibit cryptocurrency trading entirely.
“It is under consideration and (a decision) will be taken. We have to all finalise our approaches and actions based on what that decision is,” he said.
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