Why RBI Is Cautious About Stablecoins Despite Their ‘Safer Crypto’ Image

Stablecoins are often positioned as low-risk digital assets within the crypto ecosystem. But recent remarks from the RBI show why India’s central bank still sees them as a financial stability risk.

RBI deputy governor T Rabi Sankar said on 6 December 2025 that stablecoins could undermine monetary sovereignty and financial stability, reiterating India’s cautious stance on crypto assets.

For years, the Reserve Bank of India has expressed discomfort with cryptocurrencies, citing volatility, weak investor protection and systemic risks. While stablecoins are often viewed as the more sensible and utility-driven segment of crypto, the RBI believes their growing use could create risks similar to private currencies, especially if adopted widely for payments and savings.

What Is the Issue With Stablecoins, According to RBI?

Stablecoins are digital tokens typically pegged to fiat currencies like the US dollar. They are designed to maintain price stability and are increasingly used for payments, remittances and trading.

However, the RBI has consistently argued that stablecoins function as private money, which can weaken the role of sovereign currency. These concerns are detailed in the RBI Financial Stability Report, June 2023, released on 30 June 2023, available on rbi.org.in → Publications → Financial Stability Report. The report categorised crypto-assets, including stablecoins, as potential threats to financial stability.

At Mint’s Annual BFSI Conclave 2025, Sankar said stablecoins do not offer any clear public benefit that existing regulated payment systems cannot already provide.

Why RBI Sees Stablecoins as Riskier Than They Appear?

RBI’s concern goes beyond price volatility. It focuses on structural risks that may emerge during periods of stress.
 

Mint reported that RBI officials questioned whether stablecoins improve efficiency in a country where UPI already supports instant, low-cost payments at scale.

A similar concern was echoed in Business Standard, which reported that RBI fears stablecoins could undermine trust in official currency. 

How RBI’s Position on Crypto and Stablecoins Has Evolved

RBI’s caution has deepened over time as crypto adoption expanded globally.
 

In its RBI Annual Report 2022–23, published in August 2023 and available on rbi.org.in → Publications → Annual Reports, the central bank warned that crypto-assets could amplify macroeconomic and financial stability risks regardless of their design.

RBI has also highlighted India’s regulated digital ecosystem. According to NPCI data cited by Mint, UPI processed about 185 billion transactions in FY25, strengthening the argument that stablecoins add risk without offering significant efficiency gains.

What Stakeholders Are Saying?

While crypto advocates argue that stablecoins can improve cross-border payments, RBI officials maintain that such functions are better handled through regulated channels or central bank digital currencies.

Global institutions such as the BIS and IMF have raised concerns similar to RBI’s, especially around reserve backing and redemption risks.

For retail users handling financial risks and debt management, the LoansJagat article provides practical guidance on strengthening financial stability. According to LoansJagat’s November 2025 overview, RBI cautions about stablecoins due to potential undermining of sovereign monetary control, structural risks, and limited unique utility compared with regulated systems like UPI.

Conclusion

Despite their “stable” label, RBI views stablecoins as private money that could weaken monetary control. The central bank’s stance signals continued regulatory resistance to their wider use in India.

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