India’s Bureaucratic Gridlock Leaves Nation Watching from Sidelines as Asia’s Stablecoin Race Intensifies
While Asian economies sprint toward stablecoin dominance, India remains shackled by regulatory paralysis. The world's fastest-growing digital economy risks missing the boat entirely as neighboring nations aggressively court blockchain innovation.
Regulatory Runaround
Multiple government agencies can't agree on jurisdiction—finance ministry, central bank, and tech regulators all point fingers while competitors gain ground. Singapore's MAS already greenlit multiple stablecoin projects, Japan's FSA fast-tracked framework approvals, and Hong Kong positioned itself as Asia's digital asset gateway.
Innovation Exodus
Indian blockchain developers increasingly relocate to Dubai and Singapore where regulatory clarity actually exists. Local startups report losing top talent daily to jurisdictions that don't treat digital assets like financial contraband.
Market Consequences
Without rupee-pegged stablecoins, India's $4 trillion economy remains dependent on volatile cryptocurrencies for cross-border settlements. Remittance markets—crucial for India's economy—continue paying Western Union's antiquated fees instead of blockchain efficiency.
Finance ministers love talking about 'digital India' while maintaining analog banking systems—because nothing says innovation like requiring 17 signatures to move money across borders.
Brain drain
The regulatory vacuum has accelerated a brain drain that Gupta says has already occurred rather than looming.
"A lot of people have already migrated. I don't think they are still migrating—most of the top talent has already left," he said, estimating that 80-85% of India's top crypto talent has relocated internationally.
Despite collecting approximately $5.2 million (₹437.43 crores) through crypto taxation, India lacks meaningful regulatory frameworks to protect users or foster innovation.
Even Polygon, with Indian-origin founders, has become a global leader in stablecoin infrastructure and finds itself helping Indian startups relocate rather than scale domestically “to make the talent succeed."
If you can’t beat them
India's delays also occur amid a backdrop of rising regional competition, with Japan reportedly licensing JPYC to issue the first yen-backed stablecoin, backed by domestic savings and government bonds.
South Korea has also emerged as a top competitor, with ruling and opposition parties filing competing stablecoin bills that grant emergency powers to financial regulators while establishing comprehensive frameworks for won-pegged tokens.
Meanwhile, Hong Kong's stablecoin ordinance, effective since last month, positions the city as one of the first markets globally to regulate fiat-backed stablecoin issuers, though strict KYC requirements have raised industry concerns.
Even China, despite restrictions on crypto trading, is reportedly considering yuan-backed stablecoin pilots in Hong Kong and Shanghai.
“The global economy has shifted toward programmable money and tokenized assets, yet stablecoins remain under-leveraged and misunderstood in India's regulatory discourse,” Upmanyu Misra, Co-Founder of TCX, told Decrypt.
Misra described the stablecoin race as “a geopolitical competition,” saying while the U.S. has already moved and Europe and the UK are following, “India must act now” if it wants a seat in the next decade of digital finance.
"India's fintech builders are ready to move, but they need signals and not sirens,” he said.
Over 86% of financial institutions say they are open to adopting stablecoins, with one-third already using them. More than half plan to integrate them within three years, citing speed, stability, and settlement efficiency as key drivers, according to Ripple’s 2025 New Value Report.
Gupta remains cautiously optimistic about eventual progress in India, identifying three teams ready to launch stablecoin services immediately upon regulatory clarity—one major fintech and two well-funded smaller companies with proven technology.
He suggests opening existing payment infrastructure, citing Brazil's PIX system, which enables 10% of Polygon's global payment volume through open APIs that integrate stablecoins.
However, Gupta acknowledges India faces unique constraints as a capital-controlled economy, unlike the US free-float market.
This capital control framework means "CBDC becomes an important factor here for India," Gupta noted.
Rather than private stablecoins, he said, India could enable wrapped CBDC versions or ERC-compliant tokens on other blockchains to facilitate international business while maintaining regulatory compliance.
"I am always hopeful…a lot of teams that I'm talking to want to enable that," he said, hopeful that India will eventually establish regulatory clarity for stablecoin innovation.
