This document presents a strategic analysis arguing for the creation of a regulatory framework that empowers Indian private enterprises—from established banks to innovative fintech startups—to issue their own regulated, INR-backed stablecoins. This is not a proposal for a single, government-run digital currency.
We will demonstrate that this is not about embracing volatile cryptocurrency, but about adopting a superior, proven technology for payments that the world's leading economies are already institutionalizing to advance their own national interests. The current policy of regulatory ambiguity is stifling this innovation while driving Indian users and capital to unregulated offshore platforms, undermining the very goals of financial stability and oversight that regulators seek to uphold.[1]
This proposal is structured to first provide a clear understanding of the technology, then present the undeniable global strategic context, connect it directly to India's national priorities, and finally, offer a comprehensive and prudent regulatory framework for implementation.
To have a productive discussion, we must first establish a clear and precise definition. The term "cryptocurrency" is often associated with highly volatile assets like Bitcoin, which function primarily as speculative investments.[2] A fiat-backed stablecoin is a fundamentally different instrument, engineered specifically to eliminate that volatility.
A fiat-backed stablecoin is a digital token that represents a direct claim on a real-world fiat currency, such as the Indian Rupee, held in reserve.[3] Its core architecture is simple and transparent:
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1:1 Backing: For every one digital stablecoin in circulation, there is one unit of the corresponding fiat currency (e.g., one Indian Rupee) held in a segregated, audited bank account or in highly liquid government securities.[5]
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Redeemability: The holder of the stablecoin has a legal right to redeem the token from the issuer for its equivalent value in fiat currency at any time.[3]
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Price Stability: This 1:1 backing and redeemability ensures the stablecoin maintains a stable value, pegged to the fiat currency. It is designed not to fluctuate in price, making it a reliable medium of exchange.[9]
This is a digital representation of cash, operating on modern, efficient blockchain rails.[12] It is crucial to distinguish this from riskier models like algorithmic stablecoins, which are not backed by real-world assets and have a history of failure.[14] This proposal exclusively concerns fully-reserved, fiat-backed stablecoins.
A common misconception is that a digital currency must be issued by the central bank. This is not the case for stablecoins. The global model is one where private enterprises issue stablecoins, while the central bank and financial regulators provide a robust supervisory framework.
The role of the regulator is to set the rules of the road: mandating the quality and quantity of reserves, enforcing transparency through audits, ensuring consumer protection, and granting licenses to qualified issuers. The role of the private sector is to innovate, compete, and build the user-facing products and services that run on these new payment rails.
The safety and stability of a privately-issued stablecoin rests entirely on the quality and management of its reserve assets. The models being deployed by leading US firms provide a clear blueprint for how this is achieved in a regulated environment.
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The Fintech Platform Model (Stripe): Payments giant Stripe, through its subsidiary Bridge, has built an "Open Issuance" platform that enables other businesses to launch their own branded stablecoins.[16] The technical architecture for managing the reserves is a model of institutional best practice:
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Custody of Assets: Stripe does not hold the reserves on its own balance sheet. Instead, it partners with the world's largest and most trusted financial institutions. Treasury securities are managed by BlackRock, Fidelity Investments, and Superstate.[16] Cash reserves, used for daily liquidity, are held at Lead Bank.[18]
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Reserve Composition: For its own USDB stablecoin, the reserves are held in cash and short-duration money market funds managed by BlackRock.[19] This structure ensures that the assets are segregated, professionally managed, and highly liquid, minimizing risk.
-
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The Regulated Bank Model (SoFi): SoFi, a federally chartered US bank, is planning to leverage its regulated status to issue its own stablecoin, described as a potential "FDIC-insured 'deposit coin'".[21] This represents a different but equally robust model:
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Custody of Assets: As a bank, SoFi would hold the reserves as customer deposits on its own balance sheet.[22]
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FDIC Insurance: The "deposit coin" would likely leverage SoFi's existing Insured Deposit Program.[23] In this program, customer deposits are swept across a network of other FDIC-insured banks. This structure allows SoFi to offer customers FDIC insurance coverage up to $3 million, far exceeding the standard $250,000 limit at a single institution.[23] A stablecoin built on this chassis would offer an unparalleled level of consumer protection, as the underlying reserves would be explicitly insured by an agency of the US government.
-
These examples demonstrate that the private issuance model is not a "wild west." It relies on established, regulated financial institutions and proven structures for asset custody and liquidity management.
This private-public model is complementary to, not in competition with, a sovereign CBDC. The RBI's pioneering work on the e₹ is a vital piece of national infrastructure that serves as the risk-free foundation of our digital monetary future.[26]
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The Two-Tier System: The e₹, particularly in its wholesale form, can function as the ultimate public settlement asset—the foundational "Tier 1" of the digital monetary system. It provides the "singleness" and "integrity" that global bodies like the Bank for International Settlements (BIS) see as essential.[28]
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The Innovation Layer: Regulated, privately-issued stablecoins operate as the "Tier 2" innovation layer. They drive competition and build the user-facing applications in payments and commerce that leverage the programmability and accessibility of blockchain technology.[29] This two-tier structure, where private innovation builds upon a solid central bank foundation, is the model envisioned by both the BIS and the Banque de France.[31]
This is an excellent and fundamental question that gets to the heart of the innovation: If stablecoins are backed by safe assets like government securities, why not just trade the securities directly?
The answer lies in understanding the critical distinction between a Store of Value and a Payment & Settlement System. All modern financial systems are built on these two separate layers. The stablecoin innovation is not about changing the underlying safe asset; it is about radically upgrading the rails on which its value moves.
The most powerful analogy for this is India’s Unified Payments Interface (UPI).
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The Underlying Asset (Store of Value): Your INR balance in your bank account — the same, secure, regulated asset it has always been.
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The Old Rails: Before UPI, transferring this value required NEFT/RTGS. This involved exchanging account numbers and IFSC codes, operating within specific time windows, and waiting for batch settlements. It was secure, but slow and cumbersome for everyday payments.
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The New Rails (Payment Layer): UPI didn’t change your bank account. It created a new, superior technology layer on top of it. It made the value in your account instantly transferable, 24/7, using a simple, programmable identity (your VPA).
A stablecoin does for reserve assets (like Government Securities) what UPI did for bank balances.
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The Underlying Asset (Store of Value): Cash and short-term Government of India securities held in trust — the safest possible store of value.
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The Old Rails: “Trading” this asset requires a DEMAT account, a broker, exchange operating hours, and T+1 settlement. It’s an investment transaction, not a payment transaction. You cannot use a G-Sec to pay for groceries.
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The New Rails (Payment Layer): A stablecoin is a tokenized claim — a digital wrapper — around that underlying safe asset. This token lives on new, superior rails: the blockchain. It makes the secure, stored value instantly transferable and useful for payments.
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24/7/365 Global Settlement: Unlike NEFT/RTGS or market hours, blockchain networks are always on. This is essential for the internet economy and cross-border payments across time zones.
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Atomic Settlement & Finality: On a blockchain, the payment transfer and the final settlement are the same event. They happen simultaneously and irrevocably in seconds — eliminating counterparty and settlement risk inherent in traditional systems that rely on multi-day clearing and reconciliation.
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Programmability (Smart Contracts): This is the true paradigm shift. Money itself becomes programmable. An INR-stablecoin can be locked in a smart contract that:
- Automatically pays a supplier the moment a shipment is verified, or
- Instantly distributes royalties to artists when a song is streamed. This enables a new universe of automated, efficient, and transparent financial services impossible with traditional rails.
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Drastically Reduced Intermediaries: For cross-border payments, traditional rails involve multiple correspondent banks, each adding delays, fees, and complexity. A blockchain transaction can move directly from a wallet in India to a wallet in the US, collapsing the cost structure and making remittances near-instantaneous.
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Radical Transparency and Auditability: Every transaction is recorded on an immutable, shared ledger. This gives regulators a real-time “golden source” of truth, making supervision and auditing far more efficient than reconciling ledgers from multiple private institutions.
Traditional cross-border payments rely on a complex network of correspondent banks. This system is not a direct transfer of funds but a series of messages and settlements between institutions that may not have a direct relationship. This architecture introduces several technical trust challenges:
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Siloed Ledgers: Each bank maintains its own private ledger. The lack of a shared source of truth necessitates constant reconciliation—slow, costly, and error-prone.
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Lack of Transparency: It’s difficult to track payment status in real time. Funds may get stuck at an intermediary bank, with limited visibility for the sender or receiver.
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Counterparty Risk: Each intermediary introduces risk that one bank may fail to meet its obligations. Managing this requires legal agreements, collateral, and risk buffers, which add to cost and complexity.
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Inefficient Settlement: Final settlement often takes several days, depending on the business hours and processes of banks across time zones.
Blockchain provides a fundamentally different technical architecture that eliminates these weaknesses:
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Decentralized Ledger Technology (DLT): A blockchain is a shared, distributed ledger replicated across all participants. It establishes a single, immutable source of truth, removing the need for interbank reconciliation.
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Cryptographic Security: Transactions are secured using hashing and digital signatures. Each block links to the previous one, forming a tamper-evident chain that guarantees integrity and immutability.
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Consensus Mechanisms: Algorithms such as Proof of Work (PoW) or Proof of Stake (PoS) allow participants to agree on transaction validity without a central authority. This creates a trustless environment where parties can transact securely, even without direct relationships.
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Smart Contracts: Self-executing agreements written in code. These can automate escrow, compliance, or conditional fund releases, reducing counterparty risk and manual intervention.
Domestic payment systems, such as India’s Unified Payments Interface (UPI), operate under a centralized trust model. Their context and requirements differ fundamentally from cross-border systems.
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Centralized Trust Model: UPI runs on the Immediate Payment Service (IMPS)—a centralized platform managed by the National Payments Corporation of India (NPCI). NPCI serves as a trusted clearing and settlement counterparty.
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Pre-established Trust: All participants—banks and payment providers—are regulated entities with pre-existing trust relationships under RBI supervision. A decentralized trust layer is unnecessary because trust already exists through regulation.
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Efficiency of Centralization: For high-volume, low-value domestic payments, a centralized architecture offers superior speed and scalability. Blockchain’s consensus overhead would reduce throughput and increase latency.
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No Need for a “Trustless” System: The fundamental problem blockchain solves—trust between unknown parties—does not exist here. UPI participants are known, verified, and regulated, operating under uniform rules.
The most compelling justification for this approach is that it is the proven model being adopted by the world's most advanced financial markets. The global standard is not a government monopoly on digital currency, but a regulated framework that allows multiple private companies to innovate and compete.
The European Union has provided the world's first comprehensive legal framework for crypto-assets, the Markets in Crypto-Assets Regulation (MiCA).[33] The rules governing stablecoins became fully applicable on June 30, 2024, creating a clear, harmonized pathway for private issuance across all 27 EU member states.[34]
This regulatory clarity has been a massive unlock, triggering the entry of major global financial and technology players:
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Alipay's Strategic Move: Ant International, the owner of the 1-billion-user Alipay+ platform, has entered into a strategic partnership with Deutsche Bank, Germany's largest bank.[37] Their collaboration explicitly includes the exploration of stablecoins for global payments, covering real-time treasury management, reserve management, and on/off-ramp services.[37] This is a landmark development: one of the world's largest technology platforms is partnering with a premier European bank to build stablecoin solutions under the new MiCA framework. This is not a hypothetical use case; Alipay is already using a privately-issued Singapore-dollar stablecoin (XSGD) to facilitate payments between its users and merchants on the Grab platform in Singapore.[33]
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A Competitive Marketplace: The EU is not creating a single "Digital Euro." Instead, MiCA has enabled a competitive marketplace of private issuers. The European Securities and Markets Authority (ESMA) now lists multiple MiCA-compliant stablecoins, including:
The European model proves that a clear, robust regulatory framework for private issuance does not lead to chaos. Instead, it attracts the world's largest and most credible financial and technology firms, fostering a safe, competitive, and innovative ecosystem.
The argument for private innovation is not limited to public blockchains. J.P. Morgan, the largest bank in the US, has been operating its own private, permissioned blockchain platform, Kinexys, since 2019. This platform is not a speculative venture; it is industrial-grade financial infrastructure that processes over $2 billion in transactions daily and has handled over $1.5 trillion in total volume.
Kinexys functions as a payment rail and deposit account ledger for J.P. Morgan's institutional clients, allowing them to transfer funds 24/7 with near real-time settlement, bypassing traditional banking hours and cut-off times. This solves critical treasury friction points, optimizes liquidity, and speeds up commercial settlement.
Crucially, this private infrastructure is being leveraged by other global giants. Ant International (Alipay) is a key client, using Kinexys to conduct near-instant USD-to-EUR FX settlements on-chain.[44] This collaboration bridges fintech agility with institutional stability, allowing Ant to enhance the efficiency of its own global treasury management.[45]
This demonstrates the core thesis: the future of finance involves creating fundamental infrastructure that enables private enterprises—whether it's Ant International, Siemens, or BlackRock—to build more efficient financial services.[48] India must not miss the opportunity to build and regulate its own domestic infrastructure to empower its own private sector champions.
In July 2025, the United States passed the "Guiding and Establishing National Innovation for U.S. Stablecoins" (GENIUS) Act. This landmark legislation does not create a single "US Digital Dollar." Instead, it establishes a clear licensing framework for multiple private companies to become "Permitted Payment Stablecoin Issuers" (PPSIs), subject to strict federal oversight. The Act mandates 100% backing with high-quality liquid assets, enforces clear redemption rights, and integrates issuers into the US anti-money laundering (AML) framework.
The motivation behind this Act is explicitly strategic. Control over global payment rails is a cornerstone of economic statecraft. The 2022 decision to cut major Russian banks from the SWIFT messaging system, for example, had a devastating and immediate impact, paralyzing Russia's ability to conduct international trade and triggering a currency crisis.
This demonstration of power has spurred other nations to aggressively seek alternatives to bypass the dollar-based system. The US views regulated, dollar-backed stablecoins as the next-generation rails to preserve and extend its financial influence into the digital age. The White House and Treasury have been unambiguous, stating the GENIUS Act will "ensure the continued global dominance of the U.S. dollar" and marks a "seminal moment for digital assets and dollar supremacy".
The message is clear: the US is actively promoting a global ecosystem of privately-issued, dollar-backed stablecoins as a strategic imperative. For other nations, including India, failing to establish a competitive domestic alternative risks ceding the future of finance and becoming passively "dollarized" in the digital realm.
To address this comprehensively, let’s examine the chartering landscape for stablecoin issuers before and after the enactment of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act.
This section provides a technical comparison and outlines the strategic advantages of the current regulatory environment.
Before the GENIUS Act, there was no specific federal charter for stablecoin issuance. Issuers had to navigate a fragmented, high-friction regulatory maze through one of three imperfect routes:
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Process: Stablecoin issuers needed to secure licenses in every state and territory where they operated — navigating 49 separate regulatory frameworks, each with distinct definitions of “money transmission,” bonding rules, and consumer protection statutes.
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Limitations:
- No unified federal oversight.
- No access to Federal Reserve payment systems.
- Built for traditional money services businesses, not for digital asset structures.
- Extremely resource-intensive to maintain compliance across states.
Some progressive states — notably New York and Wyoming — introduced special-purpose digital asset charters.
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Process: Entities could obtain a BitLicense (NYDFS) or Special Purpose Depository Institution (SPDI) charter (Wyoming), granting limited crypto custody and issuance authority.
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Limitations:
- Still state-specific, lacking federal preemption.
- Required additional licensing in other states to operate nationally.
- Oversight tailored to state standards, not harmonized at a federal level.
The Office of the Comptroller of the Currency (OCC) issued interpretive letters (e.g., 1170, 1172, 1179) confirming that national banks and federal savings associations could hold stablecoin reserves and provide crypto custody.
-
Process: Applicants pursued a de novo special-purpose national bank charter, proving capital adequacy, governance, and risk management capacity under traditional bank rules.
-
Limitations:
- Based on legal interpretation, not explicit statute.
- Subject to political or administrative shifts in OCC policy.
- Expensive, uncertain, and time-consuming — with standards not purpose-built for stablecoins.
The GENIUS Act revolutionizes the landscape by introducing an explicit statutory regime for “permitted payment stablecoin issuers.”
It does not replace OCC chartering but rather adds a dedicated federal pathway optimized for the unique risks and structure of stablecoin businesses.
| Feature | Pre-GENIUS Act Environment | Post-GENIUS Act Environment |
|---|---|---|
| Legal Certainty | Low – dependent on state patchwork or OCC interpretation. | High – explicit statutory authority defining “payment stablecoins.” |
| Regulatory Path | Fragmented routes (MTL, SPDI, OCC). | Clear dual system: federal and state options with unified criteria. |
| Supervision | State regulators or OCC applying legacy bank rules. | Dedicated OCC framework with tailored capital and reserve rules. |
| Operational Scope | Limited by state licensing and reciprocity. | Nationwide operation under one federal license with preemption. |
| Reserve Requirements | Inconsistent, often undefined. | Federally mandated 1:1 reserves (cash, short-term U.S. Treasuries). |
| Consumer Protection | Varies by state. | Uniform federal standards: monthly reserve audits, clear disclosures. |
| Bankruptcy Treatment | Ambiguous creditor hierarchy. | Explicit statutory priority for stablecoin holders. |
Obtaining a federal charter under the GENIUS Act provides material strategic benefits:
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Regulatory Clarity & Legal Protection: Eliminates the patchwork of state regulations and uncertain OCC interpretations. Provides safe harbor under a defined federal statute.
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Operational Efficiency & Scale: One federal charter replaces dozens of state licenses — enabling immediate nationwide reach and streamlined compliance.
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Enhanced Market Credibility: Federal oversight conveys institutional-grade trust to banks, partners, and users. It signals adherence to the highest prudential standards.
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Direct Access to Federal Payment Systems: Simplifies access to Fedwire and master accounts, cutting out intermediary banks and reducing settlement costs.
The GENIUS Act does not relax regulatory rigor — it customizes it. It replaces one-size-fits-all banking rules with fit-for-purpose oversight.
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Before: Issuers seeking national charters had to comply with traditional banking rules designed for deposit-taking and lending institutions, which often didn’t apply to stablecoins.
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After: The GENIUS Act empowers regulators to craft bespoke capital, liquidity, and risk frameworks that reflect 1:1 reserve-backed models. This removes redundant requirements while maintaining strong consumer safeguards.
The US strategy has not gone unnoticed. China is pursuing a sophisticated counter-strategy, while India's own history with rupee-denominated instruments offers a critical lesson.
China is executing a carefully compartmentalized digital currency strategy to both maintain domestic control and project monetary influence abroad.[62]
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Onshore Control: Within mainland China, the state's focus is the promotion of the e-CNY, a centralized, state-controlled Central Bank Digital Currency (CBDC). The e-CNY is designed to extend the People's Bank of China's (PBoC) regulatory oversight into the digital realm and strengthen its control over the domestic monetary system, particularly in a landscape dominated by private giants like Alipay and WeChat Pay.[62]
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Offshore Innovation: Simultaneously, Beijing is using Hong Kong's separate legal framework ("one country, two systems") as a "testing ground" for privately-issued, yuan-backed stablecoins pegged to the offshore yuan (CNH).[62] Hong Kong's new Stablecoin Ordinance creates a licensing regime for private issuers, and Chinese tech giants like Alibaba (via Ant Group) have already lobbied to participate.[65]
The geopolitical logic is clear: China aims to internationalize the renminbi and compete with dollar dominance in the new digital financial architecture without risking domestic capital flight or losing monetary control.[62] This dual strategy of maintaining strict control at the core while permitting regulated innovation on the periphery is a powerful model for how to compete in the new digital economy.[62]
India has already successfully experimented with a similar concept in the traditional bond market, but the outcome provides a cautionary tale. Masala Bonds, first introduced by the IFC in 2014, are rupee-denominated bonds issued outside India.[70]
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A Strategic Success: The key innovation of Masala Bonds was shifting the currency risk from the Indian issuer to the foreign investor, allowing Indian entities to tap global capital markets without exposure to exchange rate volatility.[63] This structure was a powerful tool for funding India's infrastructure needs and promoting the internationalization of the rupee.[70]
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The Missed Opportunity: While the instrument was Indian, the marketplace was not. Lacking a domestic financial hub with the requisite global reach and regulatory clarity at the time, the majority of Masala Bonds were listed and traded on international exchanges, primarily the London Stock Exchange and the Singapore Exchange (SGX).[77] Singapore, in particular, leveraged its status as a trusted, well-regulated global financial center to become a key venue for these instruments.[78]
The lesson is clear and directly applicable to stablecoins: if India does not create the domestic infrastructure and regulatory framework for a vibrant, privately-issued INR-stablecoin ecosystem, another financial hub like Singapore, Hong Kong, or Dubai will. The innovation, the jobs, the trading volumes, and the economic value generated by our own digital currency will accrue elsewhere.
Creating a framework for private INR-stablecoins is not about following other nations; it is about deploying a superior technology to achieve India's own stated national objectives.
India is the world's largest recipient of remittances, a flow of $135 billion in FY25 that is a critical lifeline for millions of families. However, the cost of these transfers remains prohibitively high, averaging 6.4% globally. This is a challenge the RBI is actively working to solve.
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Governor Shaktikanta Das has repeatedly called for a significant reduction in the cost and time for remittances.
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The RBI's "Payments Vision 2025" document identifies enhancing cross-border payments and reducing friction as core goals.
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India has formally apprised the WTO of its goal to bring remittance costs below 3% by 2030, in line with UN Sustainable Development Goals.
A competitive market of privately-issued INR-stablecoins is the most effective tool available to achieve this. By eliminating intermediaries, stablecoin transactions can reduce costs to less than 1% and settle in minutes, not days.
The RBI has taken several commendable steps to promote the Rupee's role in global trade, including:
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Expanding the use of Special Rupee Vostro Accounts (SRVAs).
-
Permitting cross-border lending in INR to neighboring countries.
-
Reviewing the Liberalised Remittance Scheme (LRS) to promote greater use of the Rupee in international transfers.
An INR-stablecoin is a 21st-century force multiplier for this strategy. With 99% of the current stablecoin market denominated in US dollars, the digital economy is rapidly standardizing on dollar rails.[82] Fostering a vibrant ecosystem of INR-stablecoins issued by Indian companies is the only effective way to counter this trend and make the Rupee technologically accessible and competitive in global digital markets.
The goal is to create a framework that is both robust enough to ensure stability and clear enough to empower private innovation. This proposal synthesizes the best practices from leading global models, including the US GENIUS Act, Singapore's MAS framework, and the EU's MiCA regulation.
The cornerstone of the framework is a mandatory licensing regime. Any private enterprise seeking to issue an INR-stablecoin must obtain a license from the RBI to operate as a "Permitted INR Stablecoin Issuer" (PISI).
This regime, modeled on the US GENIUS Act, would create a dual pathway for private companies [50]:
-
For RBI-Regulated Banks: Existing banks could apply through a simplified authorization process to issue their own branded stablecoins.
-
For Non-Bank Entities: Fintech firms and other qualified private companies could apply for a PISI license through a comprehensive process, demonstrating adherence to stringent criteria on capital, governance, and risk management.
This creates a level playing field and a clear path to market for any qualified Indian enterprise.
To ensure the stability of any privately issued INR-stablecoin, all PISIs must adhere to unambiguous and conservative prudential mandates.
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Reserve Requirements: 100% backing of all outstanding stablecoins with a narrow list of High-Quality Liquid Assets (HQLA): cash held at scheduled commercial banks and short-term Government of India securities.[63]
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Custody and Segregation: All reserve assets must be held in segregated, bankruptcy-remote accounts with qualified third-party custodians to protect holders in the event of an issuer's failure.[74]
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Capital Buffers: Non-bank PISIs must hold their own minimum capital (e.g., ₹25 Crore) and a liquid asset buffer, separate from the stablecoin reserves, to ensure their operational viability, modeled on Singapore's framework.[74]
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Corporate Governance: All PISIs must adhere to high standards of corporate governance, including dedicated risk and compliance officers.[52]
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Radical Transparency: Every PISI must publish a monthly "Proof of Reserves" attestation from an independent, RBI-empanelled auditor.[53] They must also publish a detailed public "whitepaper" clearly explaining their stablecoin's design, risks, and the holder's rights.[73]
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Guaranteed Redemption Rights: The right of any holder to redeem a stablecoin for fiat INR at par within a legally mandated timeframe (e.g., T+2 days) must be enshrined in law.[73]
This framework directly addresses the RBI's valid concerns regarding financial stability, monetary policy, and illicit finance by incorporating proven mitigation strategies.[54] All PISIs and associated service providers will be fully integrated into India's PMLA framework, mandating stringent KYC, transaction monitoring, and compliance with the FATF Travel Rule. This creates an environment that is significantly more transparent and hostile to illicit actors than the traditional cash-based economy.
Table 1: Comparative Analysis of Global Stablecoin Regulatory Frameworks
| Regulatory Feature | USA (GENIUS Act) | European Union (MiCA) | Singapore (MAS Framework) | Proposed Indian Framework (PISI) |
|---|---|---|---|---|
| Issuer Eligibility | Banks and federally or state-licensed non-bank issuers (PPSIs). [50] | Authorized credit institutions or licensed E-Money Institutions (EMIs). [41] | Banks and licensed Major Payment Institutions (MPIs) for "Stablecoin Issuance Service". [74] | RBI-regulated banks and specially licensed non-bank "Permitted INR Stablecoin Issuers" (PISIs). |
| Reserve Asset Composition | U.S. dollars, short-term Treasury bills, central bank reserves, and certain repos. [60] | Funds held in segregated accounts at credit institutions; investments in secure, low-risk, liquid financial instruments. [61] | Cash, cash equivalents, or short-term debt securities (<=3 months maturity) issued by governments with a minimum "AA-" rating. [74] | Cash held at scheduled commercial banks, short-term (<=91 days) Government of India securities, and reverse repos backed by G-Secs. |
| Capital Requirements | Tailored capital rules to be set by regulators, exempt from traditional bank capital standards. [50] | For EMIs, own funds must be at least 2% of the average amount of reserve assets. [61] | Minimum base capital of S$1 million or 50% of annual operating expenses, whichever is higher. [74] | Minimum base capital for non-bank PISIs (e.g., ₹25 Crore) and a liquid asset buffer for operational expenses. |
| Redemption Rights | Mandated redemption at par, with procedures to be disclosed by the issuer. | Holders have a right to redeem at par at any time from the issuer. [35] | Redemption at par value must be fulfilled within five business days of request. [73] | Legally codified right of redemption at par value within T+2 business days. |
| Transparency & Audits | Periodic reports on reserves certified by executives and "examined" by public accounting firms. [50] | Issuers must publish a detailed whitepaper; reserve assets are subject to independent audit. [34] | Monthly independent attestations of reserve assets must be published on the issuer's website. [73] | Mandatory monthly public attestations of reserves by an RBI-empanelled auditor and a detailed public whitepaper. |
| AML/CFT Integration | Issuers are subject to the Bank Secrecy Act; FinCEN to write tailored AML rules. | Crypto-Asset Service Providers (CASPs) must comply with AMLD5, including the Travel Rule. [34] | Issuers are subject to MAS notices on AML/CFT, including requirements for KYC and transaction monitoring. [70] | Full applicability of the PMLA, 2002, including mandatory FIU-IND registration, KYC/CDD, and compliance with the FATF Travel Rule. |
The global financial system is being upgraded. The world's leading economies are not building this new system themselves; they are creating regulated frameworks to allow their private sectors to build it.
This proposal provides a roadmap for India to do the same. By creating a clear, robust licensing regime for private enterprises to issue their own INR-backed stablecoins, we can solve critical national challenges, unleash our domestic innovators, and secure India's leadership in the future of finance. The vision is a competitive, multi-issuer ecosystem where the sovereign e₹ provides the ultimate foundation of stability, and a host of private, regulated INR-stablecoins drive innovation and consumer choice on top.
We recommend a deliberate, phased, sandbox-first approach to implementation, allowing regulators and private industry to collaborate on refining the framework in a controlled environment before a full-scale public launch.
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