India’s central bank is tightening its caution on cryptocurrencies and stablecoins, even as global adoption accelerates at a pace that is forcing monetary authorities worldwide to confront a fast-changing digital finance landscape.
Reserve Bank of India Governor Sanjay Malhotra said on Thursday that the institution remains firmly wary of private digital tokens and will continue taking a conservative stance.
“Stablecoins, cryptos, they have a huge risk, and so we are adopting a very cautious approach towards it,” Malhotra said during a memorial lecture at the Delhi School of Economics.
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His comments reinforced the RBI’s long-standing opposition to private digital currencies, even as India’s digital payments infrastructure continues to expand rapidly.
Malhotra contrasted the RBI’s skepticism toward crypto with its enthusiastic support for innovations such as the Unified Payments Interface and digital lending.
“But at the same time, when it comes to digital innovations like UPI or digital lending, our stance has been very accommodative and very enabling,” he said.
UPI now powers billions of transactions every month and has become a showcase of India’s digital modernization.
The backdrop to Malhotra’s remarks is a global surge in stablecoin adoption — particularly tokens backed by the U.S. dollar. According to CoinGecko, dollar-pegged stablecoins have amassed a market capitalization above $300 billion, and the broader crypto ecosystem has climbed past $4 trillion. Their expanding footprint has caught the attention of policymakers, including India’s Chief Economic Adviser V. Anantha Nageswaran, who said last month that rising stablecoin popularity will become “an important phenomenon” next year and could complicate monetary policy implementation worldwide.
Despite that momentum, many central banks, including the RBI, remain reluctant to embrace stablecoins. Regulators argue that these tokens, even when fully backed by reserves, can create risks for financial stability, capital flow management, and consumer protection. Supervisors in several jurisdictions have raised concerns about the potential for sudden redemptions, the concentration of stablecoin issuers, and the possibility that large private tokens could undermine national currencies, especially in emerging markets.
Those concerns feed directly into India’s RBI’s push for its own central bank digital currency. At an IMF–World Bank event last month, Malhotra said the RBI intends to promote the digital rupee over any private digital asset, positioning the CBDC as a safer alternative that preserves monetary sovereignty.
Still, the ultimate question of whether crypto should be regulated remains with the government. “The government has to take a final view. There is a working group that was set up earlier, and they will take a final call as to how, if at all, crypto is to be handled in our country,” Malhotra said in response to a question.
So far, New Delhi is leaning away from comprehensive legislation. Reuters reported in September that India prefers partial oversight rather than full regulation, wary that legitimizing crypto could expose the financial system to destabilizing flows. International exchanges are allowed to operate in India if they register locally with an agency responsible for anti-money-laundering checks, but heavy taxes on crypto gains have drained trading volumes and pushed many users offshore.
Even with those restrictions, the RBI has maintained a steady drumbeat of public caution, which has contributed to a near-freeze in interaction between the traditional banking system and crypto platforms. Lenders have avoided providing services to exchanges, limiting the ability of users to move money in and out of digital assets.
Malhotra’s latest remarks suggest that despite the booming global stablecoin market and growing pressure on policymakers to adapt, India will continue charting its own conservative path. The RBI is embracing digital innovation where it sees clear public benefit, but drawing a hard line against private tokens it believes could introduce more risk than reward.