India to Release Crypto Discussion Paper in July Focusing on Stablecoins

India is set to release its anticipated crypto discussion paper by July, with a primary focus on stablecoins and their potential to enhance the efficiency and cost-effectiveness of remittances. The paper, developed by a working group led by the Department of Economic Affairs, will explore key use cases and draw insights from recent U.S. legislation on stablecoins. However, it will maintain a neutral stance, aiming to foster consultations across various ministries, regulators, industry stakeholders, and the public. This initial version is expected to undergo several iterations before any concrete policy is established.

Stablecoins, which are backed by real assets such as cash or gold, are valued at around $240 billion and constitute approximately 7% of the total crypto market. India's approach aligns with global trends, as the U.S. Senate recently passed a bill to regulate dollar-based stablecoins, indicating strong support from the Trump administration. India's paper may consider integrating stablecoins into the broader global payments network.

Edul Patel, co-founder and CEO of a crypto exchange, highlighted that India receives $130 billion in remittances annually, with significant losses due to fees and taxes. He suggested that stablecoins could reduce these costs to $0.3-0.5 billion, potentially increasing remittances to $200 billion. However, the Reserve Bank of India remains cautious about crypto, particularly stablecoins, due to concerns about consumer risks and the influx of foreign-linked currencies. In contrast, the Securities and Exchange Board of India appears more open to segmented regulation, supporting the idea of different regulators managing various aspects of the crypto space.

The upcoming paper is being released against a backdrop of increasing global pressure. Under its G20 presidency in 2023, India endorsed the IMF-FSB roadmap for crypto regulation and extended anti-money laundering and counter-terror financing norms to crypto platforms. These developments have made it challenging for the country to delay formal policy direction. The crypto bill drafted in 2021, which proposed a complete ban on private cryptocurrencies, was never introduced. Despite the lack of regulatory clarity, crypto adoption in India has surged, particularly among younger investors and in tier-2 and tier-3 cities.

The Indian crypto market, estimated at $2.5 billion in 2024, is projected to grow to over $15 billion by 2035 at an annual growth rate of 18.5%. Sources confirm that the July paper will outline recommendations and is not expected to implement any immediate changes. Instead, it will open the door for wider public and institutional feedback. As one official noted, this is just the beginning. After this paper, there will be consultations and at least two or three more versions before anything is finalized.

With global policies evolving rapidly, India's crypto future will depend on its ability to balance innovation with regulation. Stablecoins may be the first to receive regulatory approval, but the broader crypto roadmap remains a work in progress. The paper's release marks a significant step towards establishing a clear regulatory framework for the crypto industry in India, paving the way for future developments and consultations.