India Warns US Dollar-Backed Stablecoins Threaten Global Monetary Policy
India’s Chief Economic Adviser, V. Anantha Nageswaran, has issued a warning that U.S. dollar-backed stablecoins could pose a serious challenge to global monetary policy and the seigniorage revenues of sovereign nations.
He noted that India faces less pressure to adopt stablecoins due to its robust Unified Payments Interface (UPI) system, but expressed concern that these digital assets could intensify competition with traditional banks.
The global stablecoin market capitalization has surpassed $300 billion, driven by favorable regulatory developments in the United States. However, India has refrained from introducing specific cryptocurrency legislation, citing fears of potential financial contagion. The Reserve Bank of India (RBI) has maintained that managing crypto-related risks through regulation remains highly complex.
Currently, Indian citizens hold approximately $4.5 billion in digital assets. The government continues to impose high taxes and banking restrictions on crypto-related transactions in an effort to curb speculation and fraudulent activities.
