The U.S. GENIUS Act and Its Ripple Effect on India’s Economy: A Path to Stablecoin Innovation

Manish Patel
Jul 22
6 min read

Effect Of Genius Act Passed By USA On Indian Economy

On July 18, 2025, the United States passed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), a landmark legislation that establishes a regulatory framework for stablecoins—cryptocurrencies pegged to the U.S. dollar. With a global stablecoin market valued at $232 billion in 2025 and projected to reach $3.7 trillion by 2030, this Act positions the U.S. as a leader in digital finance. While the GENIUS Act is U.S.-centric, its global implications are profound, particularly for India, a nation with a $125 billion remittance market, robust digital infrastructure, and 107 million crypto users. This blog explores the GENIUS Act in detail, its potential impact on India’s economy, and how India could craft a similar stablecoin framework to drive economic growth, financial inclusion, and global competitiveness.

What is the GENIUS Act?

The GENIUS Act, passed by the U.S. Senate with a 68-30 vote on June 17, 2025, and signed into law by President Donald Trump, is the first federal legislation to regulate stablecoins—digital assets designed to maintain a stable value relative to the U.S. dollar through 1:1 reserve backing. Its key provisions include:

Reserve Requirements: Stablecoin issuers must hold 100% reserves in U.S. dollars, short-term Treasuries, or other low-risk assets to ensure redemption at par value, addressing risks seen in past stablecoin failures like TerraUSD.
Dual Oversight: The Department of Treasury oversees federal compliance, while state regulators handle localized enforcement, creating a balanced regulatory structure.
Consumer Protection: The Act mandates monthly public disclosures of reserve compositions, annual audits for issuers with over $50 billion in market cap, and priority repayment for holders in case of issuer bankruptcy.
Marketing Standards: It prohibits misleading claims, such as suggesting stablecoins are government-backed or legal tender, to protect consumers from fraud.
Innovation Support: Banks, fintechs, and non-bank entities can issue stablecoins, fostering competition while enforcing strict anti-money laundering (AML) compliance.

The Act aims to legitimize stablecoins for payments, remittances, and cross-border transactions, reinforcing U.S. dollar dominance in a market projected to grow exponentially.

India’s Current Crypto Landscape

As of July 2025, India lacks a specific regulatory framework for stablecoins, but cryptocurrencies are legal to hold, trade, and invest in, though not recognized as legal tender. Key aspects of India’s crypto landscape include:

Taxation: A 30% capital gains tax and 1% Tax Deducted at Source (TDS) on transactions above ₹50,000 apply to crypto, including stablecoins.
Market Size: India has 107 million crypto users and a $6.4 billion market, projected to reach $15 billion by 2035, with strong adoption in semi-urban and rural areas.
Digital Rupee: The Reserve Bank of India (RBI) is piloting its Central Bank Digital Currency (CBDC), the Digital Rupee, but private stablecoins remain unregulated.
Regulatory Uncertainty: The government has no fixed timeline for comprehensive crypto guidelines, with a Financial Stability Board (FSB) peer review scheduled for October 2025 to assess India’s stance.

India’s crypto market is vibrant, but the absence of stablecoin-specific regulation creates risks and limits potential economic benefits.

Why India is Uniquely Positioned

India’s economic and technological strengths make it an ideal candidate to adopt a stablecoin framework inspired by the GENIUS Act:

World’s Largest Remittance Market: India receives over $125 billion annually in remittances, the highest globally. Traditional systems like SWIFT charge fees up to 7%, but stablecoins could reduce costs by 90%, saving $6–8 billion annually.
Robust Digital Infrastructure: The Unified Payments Interface (UPI) handles over 50% of global real-time payment transactions by volume, and Aadhaar provides a scalable digital identity framework, enabling seamless stablecoin integration.
High Crypto Adoption: With 107 million users, India’s crypto market is driven by young investors, particularly in semi-urban and rural areas, creating a ready user base for stablecoins.
Developer Ecosystem: India’s blockchain startups (e.g., CoinDCX, Mudrex) and vast tech talent pool can drive innovation in stablecoin applications, from remittances to decentralized finance (DeFi).
Central Bank Expertise: The RBI’s experience with the Digital Rupee provides insights into digital currency design and regulation, applicable to private stablecoins.

Potential Impact of a Similar Bill in India

A “Stablecoin and Digital Innovation Act” in India could transform its economy by leveraging stablecoins’ efficiency, transparency, and global reach. The potential impacts include:

1. Economic Benefits

Remittance Savings: Stablecoins could save $6–8 billion annually in remittance fees by reducing costs from 7% to under 1%. This would boost disposable income, stimulate consumption, and drive GDP growth.
Debt Market Support: INR-backed stablecoins backed by government securities could increase demand for Indian debt, strengthening fiscal stability, similar to how U.S. stablecoins support Treasury demand.
Job Creation and Innovation: A regulated stablecoin market could spur blockchain startups, creating high-skill jobs and attracting foreign investment, positioning India as a fintech hub.

2. Financial Inclusion

Stablecoins integrated with UPI and Aadhaar could extend financial services to India’s 1.4 billion population, particularly the unbanked in rural areas. Private issuers, driven by profit motives, could develop user-friendly apps to onboard underserved populations, unlike the slower rollout of the Digital Rupee.

3. Global Leadership

An INR-backed stablecoin could be exported for cross-border trade and remittances, enhancing India’s soft power, similar to UPI’s global adoption. This would position India as a leader in the $232 billion stablecoin market, competing with U.S.-dominated stablecoins like USDT and USDC.

4. Risk Mitigation

Regulating stablecoins would reduce reliance on non-compliant exchanges, curbing illicit activities like money laundering (e.g., ₹1,858 crore in illicit remittances detected in Delhi). Strict reserve and AML requirements would enhance financial stability.

Stablecoins vs. CBDC: Why Stablecoins Could Be Better

While the Digital Rupee offers centralized control, INR-backed stablecoins provide distinct advantages:

Innovation: Private issuers compete to offer features like programmable payments and DeFi integration, unlike the RBI’s singular focus on the Digital Rupee.
Global Reach: Stablecoins operate on decentralized blockchain networks, enabling instant cross-border transactions without bilateral agreements, unlike CBDCs.
Cost Efficiency: Blockchain’s low-cost infrastructure could reduce remittance fees more effectively than the Digital Rupee’s centralized system.
Scalability: Decentralized networks handle high transaction volumes better than centralized CBDC systems, which may face bottlenecks.
Risk Diversification: Multiple private issuers reduce systemic risk compared to a single CBDC infrastructure.

Proposed Framework for India’s Stablecoin Bill

India could craft a “Stablecoin and Digital Innovation Act” with the following provisions, tailored to its context:

1. Legal Recognition

Define INR-backed stablecoins as digital tokens for payments, not securities.
Prohibit foreign currency-backed stablecoins (e.g., USD-pegged) to prevent dollarization and ensure INR dominance.

2. Reserve Requirements

Mandate 1:1 backing with INR cash, bank-insured deposits, or government securities.
Require monthly reserve disclosures and annual audits for issuers with a market cap above ₹50 billion.

3. Licensing and Oversight

Establish dual oversight by RBI (federal) and SEBI/state regulators (local).
Allow banks, fintechs, and startups to issue stablecoins, subject to RBI approval and KYC/AML compliance.

4. Consumer Protection

Guarantee 1:1 redemption rights for INR with clear dispute resolution mechanisms.
Leverage Aadhaar and UPI for secure onboarding and transaction monitoring to prevent fraud.

5. Integration with Existing Systems

Enable stablecoins to integrate with UPI for seamless domestic transactions.
Ensure interoperability with the Digital Rupee to avoid market fragmentation.

6. Taxation and Compliance

Retain the 30% capital gains tax and 1% TDS on transactions above ₹50,000, but allow deductions for losses to encourage adoption.
Register issuers with the Financial Intelligence Unit India (FIU-IND) under the Prevention of Money Laundering Act (PMLA).

7. Innovation Sandbox

Create a Web3 sandbox, similar to Telangana’s blockchain initiative, for testing stablecoin use cases like remittances and trade finance.
Partner with exchanges like CoinDCX and Mudrex for pilot programs.

Implementation Roadmap

To enact this framework, India could follow these steps:

Drafting (Q1 2026): Form a task force with RBI, SEBI, the Ministry of Finance, and crypto stakeholders to draft the bill, learning from the GENIUS Act.
Consultation (Q2 2026): Engage with crypto exchanges, startups, and the public for feedback to ensure alignment.
Sandbox Testing (Q3 2026): Launch pilot programs for INR-backed stablecoins in a regulatory sandbox, focusing on remittances and trade.
Legislation (Q4 2026): Table the bill in Parliament for passage in the Winter Session.
Rollout (2027): Issue licenses to compliant issuers and integrate stablecoins with UPI and CBDC infrastructure.

Challenges and Mitigation

Implementing a stablecoin framework in India faces challenges:

Monetary Sovereignty: Banning foreign stablecoins ensures INR dominance, mitigating dollarization risks.
Volatility and Fraud: Strict reserve requirements and AML compliance, leveraging RBI’s CBDC experience, can minimize risks.
Digital Divide: Investments in rural digital infrastructure are essential for equitable access, ensuring stablecoins benefit all Indians.

The Global Context: Why India Must Act

The GENIUS Act strengthens U.S. dollar dominance by making USD-backed stablecoins a trusted global payment tool. Without a similar framework, India risks falling behind in the $232 billion stablecoin market, ceding ground to U.S.-dominated stablecoins like USDT and USDC. The upcoming FSB peer review in October 2025 could pressure India to clarify its crypto stance, making now a critical time to act. By introducing an INR-backed stablecoin framework, India can capture economic benefits, enhance financial inclusion, and assert global fintech leadership.

Conclusion

The U.S. GENIUS Act sets a global standard for stablecoin regulation, indirectly influencing economies like India. With its massive remittance market, digital infrastructure, and crypto adoption, India is uniquely positioned to adopt a similar framework, saving $6–8 billion annually, boosting financial inclusion, and supporting debt markets. A “Stablecoin and Digital Innovation Act” could position India as a fintech leader, leveraging stablecoins’ innovation and global reach over the Digital Rupee. As the FSB peer review looms, India must act swiftly to balance innovation with stability, ensuring it thrives in the evolving digital economy.