How stablecoins could unlock India's $130 billion remittance economy

With the total stablecoin market capitalisation surpassing $250 billion for the first time last month, clocking over 50% growth in the past 12 months, the global financial system appears to be undergoing a shift. Stablecoins, which are cryptocurrencies designed to maintain a stable value by being pegged to a fiat currency like the US dollar or gold, are evolving into a medium for value transfer, settlement, and liquidity management, according to The Block Research's 'Billions to Trillions: Stablecoin Use-cases Poised to Expand the Market' report.

Stablecoins are addressing inefficiencies associated with traditional finance and have moved beyond crypto trading to solving broader problems in the financial ecosystem. Enterprises are increasingly evaluating stablecoins as tools to streamline cross-border payments, improve treasury management, and unlock new financial use cases.

According to CoinGecko data, the figure currently stands at $250.3 billion, with $245.5 billion held in U.S. dollar-backed stablecoins. Among them, Tether's USDT dominates with a market capitalisation exceeding $153 billion, followed by Circle’s USDC with $60.9 billion. Of the total figure, around $245.5 billion is linked to U.S. dollar-backed stablecoins, primarily dominated by Tether USDT, followed by Circle-backed USDC.

Why is there an appeal for stablecoins?

Experts say it lies in their hybrid nature. They combine the stability of fiat currencies with the efficiency and programmability of blockchain networks.

In India's context, this could work well, considering that the country is the world's largest remittance market, receiving more than $129 billion in 2024. Yet, the cost of transferring money from overseas remains high, around 3% to 7%, amounting to $3.72–$8.68 billion annually in fees, conversion charges, and payment processing costs.

The stablecoin opportunity remains relevant for India. The country makes up about 2% of global stablecoin flows, according to Artemis data. The supply of stablecoins in circulation has increased roughly 28% year-on-year. The total transfer volume reached $27.6 trillion last year, surpassing the combined volume of Visa and Mastercard transactions in 2024.

Speaking on the stablecoin opportunity for India, Edul Patel, Co-founder and CEO of Bengaluru-based crypto investing platform Mudrex, says the widespread usage shows a "clear market signal" that stablecoins are set to become an integral part of India’s crypto landscape, despite lacking a dedicated regulatory regime. "Most crypto trading on the Indian exchanges is driven by stablecoins such as USDT. While the regulatory clarity is still evolving, users have been operating within the legal bounds through peer-to-peer (P2P) transfers and self-serve inward remittances," Patel tells Fortune India.

The United States’ recent Guiding and Establishing National Innovation (GENIUS) Act has also added a boost to its use case in global financial markets. The proposed bill mandates 1:1 reserve backing with liquid U.S. assets, disclosures, audits, and anti-money laundering (AML) norms for stablecoin companies. Mudrex's Patel believes the GENIUS Act creates a playing field where another UPI movement "could be possible, but now, at a global level."

He says the country’s fintech ecosystem, which includes over 10,000 startups and is projected to reach a $420 billion market size by 2029, can use the emerging infrastructure to build Web3-based financial products. "A regulated stablecoin market could empower Indian fintechs to build on safer, interoperable infrastructure."

Patel says that with the US and the EU coming up with regulatory frameworks like the GENIUS Act and MiCA regulations, India needs to step up its efforts to build a framework that addresses local nuances while enabling global interoperability. "Remittance costs can be slashed by up to 90%, and settlements that traditionally take days can happen in minutes. With just one push from the regulators, India is well-positioned to play a crucial role in the global money movement via stablecoins."

Can stablecoins cut remittance costs drastically?

"Absolutely," Sumit Gupta, Co-founder of CoinDCX, tells Fortune India. “If the government opens up, stablecoins can disrupt cross-border use cases like remittances overnight. Right now, people lose 5-6% in bank fees, blockchain can bring that close to zero. The tech is ready; what we lack is a sandbox or regulatory framework for companies to experiment safely. Stablecoins and tokenisation will be massive themes this year and next, you’ll see a lot happening.”

Gupta says that since all successful stablecoins, USDT, USDC, BUSD, are backed by major exchanges like Coinbase, Binance, and Bitfinex, it shows how crucial exchanges are in making stablecoins work. "If someone builds one in India, we’re happy to support it, technically and in terms of distribution.”

The CEO and Co-founder of CoinSwitch, Ashish Singhal, proposes another option for stablecoin adoption in India—via CBDC. “India’s capital control rules make P2P transfers tough i.e. money must flow through the RBI. That’s why a government-backed CBDC might work better as a stablecoin here. Still, private players could build one too, but it must be regulated. The big opportunity is in remittances, cutting costs and speeding up transfers could be game-changing for India,” he says.

Challenges in the global adoption of stablecoins

One of the persistent challenges in the global adoption of stablecoins is regulatory uncertainty, particularly around anti-money laundering (AML) and counterterrorism financing (CTF) compliance. Enterprises looking to integrate stablecoins into their operations face a complex and fragmented regulatory landscape, increasing legal and reputational risks. Concerns about the potential misuse of stablecoins for illicit activities have also created compliance hurdles.

However, Mudrex's Patel believes such risks are negligible. "Existing regulations, such as mandatory KYC and AML checks for crypto platforms, ensure that access to stablecoins is closely monitored and bad actors can be kept out. Moreover, USD-based stablecoins trade at a premium in the Indian market, making cross-border arbitrage less attractive."

He suggests India should adopt a hybrid compliance model to regulate stablecoins. "Combining traditional fintech KYC standards with blockchain-specific on-chain analytics could be the way to make regulators more comfortable with stablecoin adoption." Patel says that with one of the largest populations of crypto users and being the remittance market, India could benefit from the cost efficiency and speed of stablecoin-based transactions.

CoinSwitch's Singhal asserts that for India, the solution might not be one-size-fits-all. “Right now, most Indians use stablecoins like USDT just to trade, because that’s how exchange order books are set up. There isn’t much demand beyond that. But tomorrow, even a CBDC could fill that role. In a market like India, the solution might not be one-size-fits-all; it could be a mix of public and private innovation."

Another challenge is the immature ecosystem. Stablecoins offer many benefits, but the infrastructure needed to support secure, scalable, and enterprise-grade adoption is still developing. “India should adopt a hybrid compliance model, mixing traditional KYC with on-chain analytics. Exchanges can handle identity checks at entry and exit points, while blockchain tools trace transactions in real time. Add FEMA-style limits, like a $250,000 cap, and you curb misuse. This balances innovation with oversight and can position India as a regulatory innovator,” Mudrex's Patel suggests.

Stablecoins are now seen at the forefront of innovation that could redefine how value moves across borders and industries. Enterprises that embrace the shift could benefit significantly. The question is how ready India is to integrate stablecoins into its financial ecosystem.