Why India must seize the stablecoin moment sparked by the US GENIUS Act

The United States’ recent Guiding and Establishing National Innovation (GENIUS) Act has shaken up the crypto space globally, triggering conversations all around from the EU in the West to Hong Kong and Singapore in the East. With bipartisan backing and strong momentum in the Senate, the GENIUS Act is considered the closest we have come to regulating stablecoins.

The GENIUS Act is a bold step towards regulating the multi-billion-dollar industry. While many nations have previously proposed various frameworks to regulate both USD and non-USD-backed stablecoins, America’s economic weightage gives this legislation an increased influence, shifting the conversation from ‘if ’ we should regulate stablecoins to ‘how’ we can regulate stablecoins responsibly. With much of the world actively working towards establishing regulations for stablecoins, India, too, needs to join the bandwagon, participating in the evolving financial landscape.

What Does the GENIUS Act Suggest?

The GENIUS Act is designed to bring stability and oversight to a sector that has outgrown its regulatory grey zone. With the stablecoin market crossing $250 billion in market cap and becoming crucial in blockchain-based transactions, the need for a standardised framework has never been more urgent. The bill’s key provisions include mandatory 1:1 reserve backing with liquid U.S. assets, public reserve disclosures, annual audits, and stringent anti-money laundering (AML) norms. Issuers must demonstrate technological and legal readiness to freeze, burn, and trace tokens if required by law enforcement.

With this, the US intends to maintain the dollar dominance that it has had for the past few decades. Having proper regulations for USD-backed stablecoins could push their use in payments by institutions and governments alike beyond the US, given the significant cost and time efficiency. Just as the U.S. led in setting the standards for internet governance and financial compliance in the past, it now wants to become the leader for crypto regulation.

Why This is a Major Opportunity for India

Today, India is the world's largest remittance market, receiving a staggering $130 billion in 2024. The growing use of stablecoins in global transactions highlights the importance of regulatory leadership. Nations that establish clear frameworks early on could help shape how digital assets are integrated into the global economy, which may influence financial ecosystems like India's.

On the other hand, this is a building opportunity for India. The country’s fintech ecosystem, which boasts over 10,000 startups and is projected to reach a $420 billion market size by 2029, can leverage this emerging infrastructure to build innovative Web3-based financial products. A regulated stablecoin market could empower Indian fintechs to build on safer, interoperable infrastructure. The GENIUS Act creates a playing field where another UPI movement could be possible, but now, at a global level. The clarity in US regulations can also open doors for Indian startups to collaborate and gain access to investment opportunities to build world-class Web3 solutions, given that India ranks second in the global Web3 talent pool, just behind the US.

More importantly, the ease of making international payments will bring more money into remittance-heavy countries like India. With more dollars entering the country, the spending is expected to increase significantly, directly boosting the economy.

However, for India to utilise these emerging opportunities, it is important that we take a stance on how we look at stablecoins and crypto as a whole. While there has been significant progress over the years with the introduction of tax laws for crypto investments and India advocating for standardised crypto regulations during the G20 Presidency, it is time to accelerate the process to be able to lead the change in the global financial ecosystem.

Way Forward

In my opinion, the GENIUS Act is the beginning of a transformation that is to come in the financial ecosystem. If done right, this could change the way money moves and impact all major nations as we move towards a digital-first economy. India must act fast to mark its place in this evolution. With the world’s largest tech-savvy population and a booming fintech sector, India could lead both as a producer and a consumer of the infrastructure that is built in this space. This positions India to become a global leader in the stablecoin and digital asset economy, provided we have regulatory clarity that balances consumer protection and allows responsible innovation in the space.

(Edul Patel is the Co-founder and CEO of Bengaluru-based crypto exchange Mudrex)