Source: BS
Context:
Stablecoins, pegged to the US dollar and designed to reduce crypto volatility, are seeing significant adoption in India even though they lack regulatory backing. This comes as the Reserve Bank of India (RBI) pilots its own Central Bank Digital Currency (CBDC) as a sovereign alternative.
Key Highlights:
- What are Stablecoins?
- Private cryptocurrencies like Tether (USDT) and USD Coin (USDC), pegged to the US dollar with 1:1 convertibility.
- Used widely in crypto trading and cross-border remittances for instant, low-cost transfers.
- Adoption in India:
- India reportedly has 314 million stablecoin holders, the highest in the world.
- Users prefer them for global acceptability and faster remittances compared to banks.
- Global Context:
- The US passed the GENIUS Act (2025), providing a regulatory framework for stablecoins.
- However, risks remain—as seen in the TerraUSD collapse (2022), which wiped out $60 billion.
- Risks in India:
- No legal recognition or customer protection.
- Private stablecoins may collapse if issuers fail or pegs break.
- RBI’s CBDC as Alternative:
- RBI released a CBDC concept note (2022) and is conducting pilots.
- CBDC will be equivalent to sovereign-backed digital cash, ensuring public trust, security, and programmability.
- Designed to coexist with bank deposits and UPI-based digital payments, not disrupt them.
