Stablecoin

In brief

• Polygon’s Aishwary Gupta says no Indian government department wants ownership of stablecoin regulation, creating bureaucratic deadlock across agencies.
• Gupta estimates India could save $68 billion annually through stablecoin integration, but regulatory uncertainty prevents banks from acting.
• 80-85% of India’s top crypto talent has relocated internationally, Gupta said, while Asian neighbors advance clear stablecoin frameworks.

India’s massive Web3 ecosystem remains paralyzed by bureaucratic turf wars that industry leaders warn are costing the nation trillions, while Asian neighbors race ahead with clear stablecoin frameworks as the U.S. guides financial institutions through landmark legislation. 

“None of them,” Aishwary Gupta, Global Head of Payments & RWAs at Polygon Labs, told Decrypt, when asked whether Indian banks are ready to support stablecoin infrastructure. 

In an interview with Decrypt, Gupta discussed India’s position in what he describes as an emerging “crypto cold war.”

He estimates India could save $68 billion (₹5.7 lakh crores) annually by integrating stablecoins into international payment flows, but regulatory inaction has left the country, home to one of the world’s largest Web3 developer and user bases, sidelined while other nations advance.

President Trump signed the GENIUS Act into law in July, providing clear regulatory guidelines for American financial institutions to issue stablecoins, with major players preparing dollar-backed crypto tokens under the established framework.



Behind the regulatory paralysis in India lies what Gupta calls a fundamental “ownership crisis” that he has witnessed through direct interactions with government bodies across the bureaucratic spectrum. 

“Nobody wants to take this as an ownership,” Gupta explained, describing a coordination challenge involving the Ministry of Finance and the Ministry of Electronics and Information Technology. 

He also flagged the Centre for Development of Advanced Computing, the Central Board of Direct Taxes, and the Financial Intelligence Unit, each overseeing different aspects of crypto regulation, to begin taking responsibility.

Even Polygon, with Indian-origin founders, has become a global leader in stablecoin infrastructure and finds itself helping startups to scale in different markets to make the talent succeed.

“Everyone is saying that other departments should take the lead, but no one is stepping forward to say they see value in starting this initiative,” Gupta said, pointing to a bureaucratic gridlock that has persisted for years.

While India struggles to identify a single point person, Dubai operates through VARA, Hong Kong through HKMA, Singapore through MAS, and Thailand through dedicated government blockchain bodies. 

“I am doing this for almost every Asian country but not for India as a whole because I don’t know where to start or whom to approach,” Gupta said, listing his work designing real-world asset products for governments across the region.

Gupta’s conversations with banking executives reportedly revealed a consistent pattern of institutional hesitancy rooted in practical concerns, cautious about proceeding without clear guidance from the Reserve Bank of India.

“Their biggest challenge is not that they don’t want to do it, it is that they don’t know what RBI’s stance is on it,” Gupta explained, noting that banks would embrace stablecoin infrastructure immediately upon receiving clear guidance.”

However, while speaking to Decrypt, Suraj Sharma, Head of India (Legal & Compliance) at crypto exchange Gate.io, defended regulatory caution, citing “legitimate concerns—monetary sovereignty, capital flight, and systemic risk.” 

“Unregulated stablecoin flows can circumvent capital controls, potentially undermining macroeconomic stability,” he said.

Sharma added: “Until there’s a policy that differentiates use cases like remittances, B2B settlements, and on-chain FX, the risk outweighs the reward,” urging transparency and compliance before moving forward.

The RBI continues to push digital rupee initiatives, but Gupta questions whether the central bank digital currency approach addresses real opportunities. 

Existing cross-border payment revenues, where banks can earn $2,000-3,000 on a $100,000 international transfer, create institutional resistance to cost-reducing technologies, he said.

“We need like one bank to actually go out and start that for kind of getting and creating this whole ripple effect,” he said, noting how competitive pressure could drive industry-wide adoption once a single institution demonstrates reduced costs through stablecoin integration.

Brain drain

The regulatory vacuum has accelerated a brain drain that Gupta says has already occurred rather than looming. 

“A lot of people have already migrated. I don’t think they are still migrating—most of the top talent has already left,” he said, estimating that 80-85% of India’s top crypto talent has relocated internationally.

Despite collecting approximately $5.2 million (₹437.43 crores) through crypto taxation, India lacks meaningful regulatory frameworks to protect users or foster innovation. 

Even Polygon, with Indian-origin founders, has become a global leader in stablecoin infrastructure and finds itself helping Indian startups relocate rather than scale domestically “to make the talent succeed.” 

If you can’t beat them

India’s delays also occur amid a backdrop of rising regional competition, with Japan reportedly licensing JPYC to issue the first yen-backed stablecoin, backed by domestic savings and government bonds.

South Korea has also emerged as a top competitor, with ruling and opposition parties filing competing stablecoin bills that grant emergency powers to financial regulators while establishing comprehensive frameworks for won-pegged tokens.

Meanwhile, Hong Kong’s stablecoin ordinance, effective since last month, positions the city as one of the first markets globally to regulate fiat-backed stablecoin issuers, though strict KYC requirements have raised industry concerns. 

Even China, despite restrictions on crypto trading, is reportedly considering yuan-backed stablecoin pilots in Hong Kong and Shanghai.

“The global economy has shifted toward programmable money and tokenized assets, yet stablecoins remain under-leveraged and misunderstood in India’s regulatory discourse,” Upmanyu Misra, Co-Founder of TCX, told Decrypt.

Misra described the stablecoin race as “a geopolitical competition,” saying while the U.S. has already moved and Europe and the UK are following, “India must act now” if it wants a seat in the next decade of digital finance.

“India’s fintech builders are ready to move, but they need signals and not sirens,” he said.

Over 86% of financial institutions say they are open to adopting stablecoins, with one-third already using them. More than half plan to integrate them within three years, citing speed, stability, and settlement efficiency as key drivers, according to Ripple’s 2025 New Value Report.

Gupta remains cautiously optimistic about eventual progress in India, identifying three teams ready to launch stablecoin services immediately upon regulatory clarity—one major fintech and two well-funded smaller companies with proven technology.

He suggests opening existing payment infrastructure, citing Brazil’s PIX system, which enables 10% of Polygon’s global payment volume through open APIs that integrate stablecoins. 

However, Gupta acknowledges India faces unique constraints as a capital-controlled economy, unlike the US free-float market.

This capital control framework means “CBDC becomes an important factor here for India,” Gupta noted. 

Rather than private stablecoins, he said, India could enable wrapped CBDC versions or ERC-compliant tokens on other blockchains to facilitate international business while maintaining regulatory compliance.

“I am always hopeful…a lot of teams that I’m talking to want to enable that,” he said, hopeful that India will eventually establish regulatory clarity for stablecoin innovation.

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