The Reserve Bank of India (RBI) has raised concerns about cryptocurrencies, including stablecoins, warning they pose significant risks to the country’s financial stability.
In its latest 2024 Financial Stability Report, the RBI noted that despite a surge in crypto adoption across India, the unregulated use of digital assets could undermine monetary control, enable capital flight, and divert resources from the real economy. The report highlighted that while India’s crypto market is relatively small, the growing overlap between decentralized and traditional finance could escalate systemic risks.
Stablecoins, in particular, were flagged as highly risky due to their potential for financial runs. The RBI cited the IMF–FSB report, which noted that stablecoin issuers are increasingly holding substantial volumes of mainstream financial assets, such as government securities, which could disrupt economic stability.
The central bank warned that stablecoins could challenge monetary policy, bypass capital controls, and strain fiscal resources. These risks are especially pronounced in emerging markets like India, where specific economic and demographic factors drive higher usage of stablecoins.
RBI Governor Shaktikanta Das has been vocal in his criticism of stablecoins, labelling them “private money” that could threaten government sovereignty by dominating payment systems. At the G30 International Banking Seminar in October, Das emphasized that stablecoins’ risks outweigh their benefits and reiterated support for Central Bank Digital Currencies (CBDCs), which offer government-backed security and guaranteed settlements without collateral.
In line with these warnings, India is reportedly considering banning private cryptocurrencies, including Bitcoin and Ether, while promoting its digital rupee. Government officials argue that CBDCs can fulfil cryptocurrency functions with fewer risks and greater benefits, such as enabling targeted credit and tokenizing government securities for financial inclusion.
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