India’s Stablecoin Stumble: A $68B Missed Opportunity in Regulatory Limbo

India's regulatory landscape for stablecoins remains mired in bureaucratic inefficiencies, allowing Asian and U.S. jurisdictions to advance with clearer frameworks. The nation, home to one of the largest Web3 ecosystems, is losing out on potential economic gains as it grapples with internal coordination issues among various government bodies, according to Aishwary Gupta, Global Head of Payments & RWAs at Polygon Labs. Gupta estimates that India could annually save $68 billion by integrating stablecoins into international payment systems. However, the absence of a unified regulatory approach is delaying progress.

The country's regulatory paralysis is attributed to what Gupta calls an “ownership crisis,” where no single department is willing to take responsibility for overseeing stablecoin regulation. Several agencies, including the Ministry of Finance, the Ministry of Electronics and Information Technology, the Centre for Development of Advanced Computing, the Central Board of Direct Taxes, and the Financial Intelligence Unit, are all involved, yet none have stepped forward to drive the initiative. This lack of clarity has created a vacuum, with global players like Dubai, Hong Kong, Singapore, and Thailand already operating through dedicated regulatory bodies.

In contrast, the U.S. has made significant strides with the passage of the GENIUS Act, which provides a regulatory framework for financial institutions to issue stablecoins. This legislative clarity has accelerated adoption in the U.S. and is projected to open a $200 billion market opportunity. The act mandates that stablecoins be backed 1:1 by cash or short-term U.S. Treasury bills and requires monthly audits and public disclosures. These rules have positioned companies like Circle, the issuer of USDC, to dominate the space, while others like Tether face challenges in aligning their business models with the new regulations.

Asia's broader fintech funding environment has also shifted. According to KPMG’s Pulse of Fintech report, funding in the Asia-Pacific region dropped to a decade-low $4.3 billion in the first half of 2025. While the U.S. and Europe continue to dominate fintech investment, Asia’s focus has pivoted toward infrastructure, AI-driven efficiency, and regulatory clarity. Investors are favoring projects that demonstrate tangible value, regulatory compliance, and long-term sustainability over speculative ventures. Despite the decline, Asia remains a key player in the digital asset space, with countries like Hong Kong and Japan introducing clearer regulations to support stablecoin adoption.

India’s regulatory inertia contrasts sharply with the dynamic global environment. While companies and governments across the world are leveraging stablecoins for cross-border payments, treasury management, and real-world asset tokenization, India remains stuck in an interministerial debate. This delay not only hampers economic growth but also risks losing a generation of Web3 talent to more accommodating markets. As the global stablecoin ecosystem continues to expand, India’s reluctance to act decisively could result in a widening gap, leaving the country at a disadvantage in the rapidly evolving financial technology landscape.

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