India in 'Wait-and-Watch' Mode on Stablecoin Regulation Amid Global Risks

• The Indian government is observing global impacts, particularly from the US, before formulating stablecoin regulations.
• Stablecoins, like Tether and USD Coin, are cryptocurrencies pegged to stable assets, unlike volatile Bitcoin or Ethereum.
• The Reserve Bank of India (RBI) and finance ministry officials highlight risks such as disruption of capital flows, currency substitution, and reduced monetary policy effectiveness.
• The Economic Survey 2025-26 warns of capital flight risks due to stablecoins, especially for capital-dependent economies like India.
• The US GENIUS Act aims to regulate dollar-backed stablecoins, with its success potentially disrupting capital flows to emerging economies.

Why It Matters: India adopts a cautious approach to stablecoin regulation, monitoring global developments and potential financial risks.