India leaves crypto and stablecoins at the door in fintech jamboree

MUMBAI: At the world’s largest gathering for the financial technology sector in Mumbai this week, more than 800 speakers tip-toed around two topics that have captured attention globally: cryptocurrencies and stablecoins.

About 100,000 participants converged for the three-day conference starting October 7 in India’s financial capital, headlined by the prime ministers of India and the United Kingdom, and drawing regulators, investors and industry executives from more than 100 countries.

The annual conference kicked off just as bitcoin catapulted to an all-time high above $125,000 but that milestone found no mention at the conference on the back of India’s regulatory caution around the sector.

Bitcoin hits all-time high above $125,000

India is leaning towards not creating legislation to regulate the sector, Reuters reported last month.

“Avoid crypto remarks”

“Please avoid political, crypto, religious, or personal remarks on stage or at the venue,” read a document containing guidelines for speakers, a copy of which was shared with Reuters by a participant.

Organisers for the event, the Payments Council of India, National Payments Corporation of India and the Fintech Convergence Council did not immediately respond to a request seeking comment.

The warning highlights a contrast with other Asian economies and regions such as Japan, Hong Kong and Singapore, which have made efforts to establish themselves as regional hubs for cryptocurrency and stablecoins.

Instead, regulators spotlighted India’s central bank digital currency, called the e-rupee, with the Reserve Bank of India launching pilots for deposit tokenisation and a sandbox for fintechs.

All told, more than 50 products debuted at the event, including PayPal’s global wallet platform, biometric authentication for payments via India’s Unified Payments Interface, and the India launch of U.K.-based Revolut’s payment platform.

“The policy ambivalence has a chilling effect on the development of commercial use cases for stablecoins in India,” said Mandar Kagade, founder of Delhi-based Black Dot Public Policy Advisors.

Little appetite for crypto ventures

At least six industry executives on the sidelines of the event said that while entering into the crypto sector could offer fresh business lines and help attract investment, there is little appetite in the absence of regulatory blessing.

“There is cause for fair degree of caution (on stablecoins),” said Sahil Kini, the CEO of Reserve Bank of India Innovation Hub, while addressing a session on Tuesday. “I don’t think this kind of stance changes overnight.”

India’s fintech sector raised a total of $3.5 billion last year, the lowest since 2020 and well off the peak of $9.2 billion in 2021, per data from Tracxn.

“Regulators need to have an iterative approach instead of the complete aversion they have towards stablecoins currently,” said Joseph Sebastian, vice president for investments at Mumbai-based venture capital firm Blume Ventures.

The first step can be allowing inward remittances via U.S. dollar stablecoins as the regulatory grey-zone also complicates the picture for startups and investors, he noted.

Globally, U.S. dollar stablecoins have amassed a market capitalisation of over $300 billion, while the overall market cap of crypto tokens has climbed to more than $4 trillion, according to industry data provider CoinGecko.

“It’s becoming real whether we like it or not, so it’s imperative to figure out how to engage with it,” said Vivekdeep Gupta, an independent consultant focused on digital assets who advises half a dozen startups.

There is a “huge amount of energy but lack of regulatory clarity is also causing brain-drain,” Gupta said, pointing to a preference for companies in the sector to incorporate overseas.