Ex-RBI Director Demands Clear Regulation for Stablecoins in India

India's crypto crossroads—regulatory clarity or continued chaos?

Former Reserve Bank of India director calls for urgent framework to govern stablecoin adoption. Without clear rules, the market risks either stifling innovation or inviting regulatory crackdowns—because nothing says 'financial stability' like watching from the sidelines while others build the future.

The push comes as global stablecoin usage surges, leaving Indian regulators playing catch-up. Traditional finance moves at bureaucratic speed while digital assets evolve at light speed—quite the mismatch for an economy aspiring to lead in tech.

Time for regulators to step up or step aside.

Government’s Partial Approach to Crypto

While the government considers stablecoins separately, it remains cautious about cryptocurrencies. A recent government document seen by Reuters indicates that India does not plan to create a full legal framework for crypto. Instead, authorities are opting for partial oversight, citing risks to the financial system if crypto becomes fully mainstream.

The document says that “regulating cryptocurrencies WOULD effectively give them legitimacy,” which could bring bigger risks to the financial system. But it also admits that banning crypto completely isn’t realistic, since peer-to-peer transfers and trades on decentralized platforms will keep happening.

Padmanabhan’s warning shows why India can’t wait for stablecoins. Clear rules will help India push digital payments forward, keep the financial system safe, and stay in step with the rest of the world.

Also Read: Mudrex Survey: 93% of Indian Investors Support Crypto Regulation