News | 📢 India at a Crossroads on Crypto Policy After US Stablecoin Law

📢 India at a Crossroads on Crypto Policy After US Stablecoin Law

News

31 July 2025

2 min read

UBS Forums

India’s crypto regulation debate has reignited following the United States' landmark legislation on stablecoins. The US recently passed the GENIUS Act, which sets clear rules for the issuance and backing of dollar-pegged stablecoins by banks and licensed entities. The move is seen as a global benchmark — and is now pushing countries like India to clarify their own crypto stance.

While the Reserve Bank of India (RBI) continues to resist the legalisation of private cryptocurrencies, including stablecoins, experts say India can no longer afford to delay regulatory clarity. With more than 20 million Indian crypto users already transacting in offshore stablecoins like USDT and USDC, industry insiders warn that India risks being left behind in global fintech innovation.

Currently, India taxes all virtual digital assets (VDAs) at 30% on gains and 1% TDS on transactions. However, there’s no formal regulation recognising or licensing stablecoins. Meanwhile, India’s central bank digital currency (CBDC), the e-rupee, remains in limited retail use, with a circulation of ₹1,016 crore as of March 2025.

"The US law puts pressure on us to create a balanced framework," said a senior fintech policy analyst. "The demand isn’t for a free-for-all, but for rules that differentiate between use-cases like remittances or trading."

Some regulators like SEBI have advocated for a multi-agency oversight model, assigning responsibility for crypto assets based on their function—whether currency, security, or commodity. But RBI remains concerned about the risks of financial instability, capital flight, and loss of monetary sovereignty.

Recent security breaches involving major Indian crypto exchanges have also raised alarm bells. In July, CoinDCX reported a ₹378 crore hack, following a ₹2,000 crore attack on WazirX in 2024.

Despite growing investor interest and institutional pressure, the government has yet to release a comprehensive crypto policy. A discussion paper expected last year was reportedly delayed to factor in international developments, including the EU’s MiCA framework and now the US stablecoin law.

As global crypto regulation matures, India’s path forward could determine not just the domestic market’s future, but also the country’s leadership in the next generation of digital finance.