India's Central Bank Draws Line on Stablecoins, Advances CBDCs

Speaking at the Mint Annual BFSI Conclave 2025 in Mumbai, RBI Deputy Governor T. Rabi Sankar said stablecoins undermine trust in sovereign currency and raise concerns extending beyond illicit finance and capital-flow circumvention.

“Stablecoins raise significant concerns for monetary stability, fiscal policy, intermediation, and systemic resilience," Sankar noted.

Don't fix what isn't broken

He pushed back against claims that stablecoins provide faster or cheaper payments, including for cross-border transactions, arguing that India already operates large-scale, real-time digital infrastructure. Government-backed systems such as the Unified Payments Interface (UPI), along with real-time gross settlement and electronic funds transfer networks, already enable low-cost, near-instant transactions at scale.

“There is no reason to believe that stablecoins would be superior in terms of cost, speed, or reliability," he said.

At a more fundamental level, Sankar questioned whether stablecoins and cryptocurrencies qualify as money at all. He described stablecoins as “private money,” arguing that issuance by private entities prevents them from meeting the core characteristics of modern sovereign currency.

Scepticism reigns

Sankar was blunter on cryptocurrencies, characterizing them as speculative instruments rather than assets. “Cryptocurrency is not a financial asset – or, for that matter, any asset at all. It is just a piece of code,” he said, describing unbacked cryptocurrencies as “pure gambles.”

He added that cryptocurrencies lack intrinsic value and are not supported by any promise of future cash flows, noting that traditional assets typically represent either a liability or a claim on future income.

India to chart its own path

The RBI’s position contrasts with developments in the US, where policymakers are moving to establish regulatory frameworks for dollar-backed stablecoins. In India, authorities are instead exploring tightly controlled digital alternatives. Policymakers are examining a rupee-linked stablecoin structure alongside ongoing experiments with a central bank digital currency (CBDC).

Sankar said CBDCs offer a sovereign-backed digital option that preserves monetary control, while acknowledging unresolved privacy challenges. “For CBDCs to have the same demand that paper currency has, anonymity is unavoidable,” he said, adding that achieving cash-like privacy would require both technological and legal safeguards.

“Over time, the form of money has evolved with technology,” Sankar said. “But the fundamental challenge of cryptocurrencies is that they claim to change the very nature of money.”