RBI Rejects Stablecoins: Why India Says They Cannot Replace Money

Key Takeaways 

• According to the RBI Payments Systems Report published on May 18, stablecoins cannot be used as money since they fail the three criteria of singleness, elasticity, and integrity. The RBI suggests using the CBDC as a better choice. 
   
• Earlier, the RBI tried to prohibit cryptocurrencies in India. However, the Supreme Court nullified this decision. Since then, the RBI has been consistent in its support of the digital rupee against private digital assets.

Why the RBI Discredits Stablecoins: Why Stablecoins Are No Substitute for Real Money?

According to the RBI Payments Systems Report of May 18, stablecoins failed the three key characteristics of money that are singleness, elasticity, and integrity. It means that stablecoins cannot replace conventional money in the economy of India.

From now on, the use of private cryptocurrencies will be restricted in India. Moreover, in the future, this approach will protect the currency of India, the rupee, from stablecoins, which pose a threat to India’s monetary independence.

Impact on the Average Indian Citizen

The citizens of India send and receive remittances in large volumes. According to estimates, the remittances received in 2024 exceeded $129 billion, which makes India the leading nation in terms of the volume of remittances.

Since stablecoins are cheaper and faster compared to conventional currencies, their usage will help reduce costs related to remittances for regular Indian citizens. 

On the other hand, the RBI emphasises that stablecoins will pose a significant threat to the monetary sovereignty of India. 

For example, a stablecoin pegged to the dollar would contribute to dollarization without anyone noticing. The digital rupee, on the other hand, will provide Indians with a chance to conduct their transactions without exposing their wealth to any risks associated with dollars. 

Over 120 million transactions using the e₹ took place until December 2025, with the total amount of the transactions reaching over ₹28,000 crore. 

Experts Mostly Agree With the RBI, But There’s a Catch 

“Central banks should protect monetary sovereignty. The private stablecoins are likely to disrupt payment systems and undermine policy efficiency,” as noted by former Deputy Governor of RBI R. Gandhi.

Moreover, BIS supports the position of the RBI in its Annual Economic Report 2025. According to BIS, stablecoins are unsuited structurally to act as a monetary anchor because they lack singleness, elasticity, and integrity. 

At the same time, a complete prohibition on stablecoins would be excessive and could harm technological innovations in the field and drive liquidity offshoring. 

An alternative solution suggested by BIS could be integrating private cryptocurrencies into India’s digital financial infrastructure under strict regulations. It would involve requirements like KYC, auditing reserves, and RBI approval.

Conclusion

The position of the RBI is justified and supported internationally. Stablecoins of today are simply unreliable enough to be considered as the basis for money. However, rejecting stablecoins altogether might mean missing out on some opportunities in a dynamic area of finance.

FAQs 

Why does the RBI discourage the use of stablecoins and prefer the use of the digital rupee?

According to the RBI, stablecoins cannot be used as money since they do not meet the necessary criteria, such as value constancy, liquidity, and protection from illegal activities. The digital rupee is considered more appropriate since it would keep the monetary system of India within RBI regulation.

Why did the RBI resist the use of cryptocurrencies such as Bitcoin in India?

RBI has pointed out many disadvantages associated with the use of cryptocurrencies, including Bitcoin, over the years. Cryptocurrencies pose high risks due to volatility and are hard to regulate. They could be harmful to the financial stability of India.