Synopsis: India is considering stablecoin regulations in its Economic Survey 2025-2026, exploring rupee-pegged stablecoins like the ARC token for faster transfers, despite RBI’s cautious stance favoring CBDC and systemic stability.
India may soon explore a regulatory pathway for stablecoins, potentially reshaping its digital finance sector. Despite caution from the Reserve Bank of India (RBI), the government could set clear guidelines for rupee-pegged coins in 2026, signaling a major shift.
Diverging Views within India
India’s Ministry of Finance plans to present a case for stablecoins in its upcoming Economic Survey 2025-2026. This signals possible policy changes as the government weighs the benefits for payments and remittances.
In contrast, the Reserve Bank of India remains skeptical, repeatedly emphasizing the risks involved, including disruption of monetary policy and vulnerability to financial crimes like money laundering. The RBI prefers to prioritize its central bank digital currency (CBDC), citing India’s strong digital payment infrastructure such as UPI and RTGS as adequate for most needs.
The Government’s Experimental Approach
The Ministry of Finance hints at an experimental model, possibly involving regulated rupee-backed coins for fast, cheap cross-border transfers. There is already momentum behind projects like the Asset Reserve Certificate (ARC), a rupee-pegged token developed by Polygon Labs and Anq Labs. Set for a Q1 2026 launch, ARC would be backed by Indian government securities, demonstrating India’s effort to maintain rupee sovereignty and reduce outflow to dollar-pegged tokens.
If ARC takes off, it could help India retain liquidity and make domestic debt attractive. Some finance insiders believe innovation is crucial for India’s leadership in digital finance.
RBI’s Cautious Stance
RBI Governor Sanjay Malhotra explains the central bank’s concerns capital flight, monetary instability, and security risks remain top of mind. Additionally, the RBI’s digital rupee pilot shows strong growth: over five million users and ₹1,000 crore in transactions in just three years. The RBI encourages global CBDC adoption and shows interoperability for cross-border payments.
The central bank wants private banks to issue digital rupees under RBI supervision, retaining control over the monetary base. For now, the RBI sees its job as safeguarding macroeconomic stability rather than rushing into new crypto territory. My impression is that caution is warranted, but missing out could mean India falls behind in financial innovation.
Path Forward and Possible Impacts
India’s journey has been turbulent. The RBI’s earlier banking ban was overturned, but frequent tax changes have restrained growth. Globally, India faces pressure from the US and China to respond as digital assets proliferate. Over 20 million Indians now hold crypto, with $10 billion stablecoin inflows in the first half of 2025, mostly USD-based.
If the government formalizes a stablecoin framework in 2026, India could attract major blockchain firms and create new opportunities in decentralized finance and NFTs. Analysts project ARC-like coins might retain billions in domestic liquidity. Yet, balancing innovation and risk will require careful sandbox testing and open debate.
For now, India’s stablecoin future hangs on the Economic Survey and financial sector consensus. Retail investors and fintech firms should watch closely as policy evolves.
Written By Fazal Ul Vahab C H
