For Indian investors, policymakers, and fintech participants, this could mark the beginning of a major transformation in the way capital flows, and digital money is used, and financial services are structured.
The act provides a comprehensive framework for regulating US dollar-backed stablecoins. It mandates that these tokens be fully backed by liquid dollar-denominated assets, enforces monthly reserve disclosures, and brings stablecoin issuers under the regulatory ambit of federal and state authorities.
The act legitimises the role of private stablecoins— such as those issued by PayPal or Circle—as long as they meet the compliance requirements on reserve backing, anti-money laundering, and consumer protection. In effect, the US has created a parallel digital currency system built on credibility, transparency, and institutional oversight.
For India, this development has far-reaching consequences. Even though the Reserve Bank of India has taken a cautious stance toward cryptocurrencies, Indian users and platforms have already been interacting with stablecoins, especially for cross-border remittances, dollarhedging, and global crypto trading.
The GENIUS Act formalises what was once a grey area, and in doing so, it elevates the status of US stablecoins from fringe instruments to potential cornerstones of digital finance. This shift has the potential to challenge not only cryptocurrencies but also traditional fiat-based systems, including India’s own digital rupee.
One of the most immediate effects will likely be felt in capital mobility. A fully regulated, audited, and liquid dollar-stablecoin could quickly become a preferred vehicle for cross-border fund flows, institutional hedging, and even settlement of real-world assets.
What it means for Indian investors
Indian investors, especially high-net-worth individuals and corporates operating under the Liberalised Remittance Scheme (LRS), may find such stablecoins an attractive alternative to conventional forex channels, especially if they offer speed, lower costs, and dollar exposure.
This could create new pressure on the Indian rupee, particularly if demand for stablecoins rises without adequate domestic alternatives.
Fintech firms in India may also find themselves at a crossroads. With a trusted, regulated stablecoin available, many cross-border service providers, wealth-tech platforms, and global investment facilitators may rewire their backend systems around these digital dollars.
While this opens up innovation opportunities, it simultaneously risks shifting high-value services out of India’s regulatory domain. Unless Indian authorities provide clarity on how stablecoins can be used within the legal framework, a wave of offshore migration—both technological and financial—may follow.
Another subtle but significant impact may be on the digital rupee itself. While the RBI’s central bank digital currency (CBDC) is still in its pilot phase, its success hinges on uptake by banks, corporates, and eventually the public.
The GENIUS Act creates a clear benchmark: a digital dollar that is credible, easy to use, and globally accepted. If the e-rupee cannot match that in trust or functionality, it may be bypassed in international trade and investment transactions—particularly by firms with global operations.
For Indian regulators, this moment presents a strategic inflection point. The focus can no longer be limited to taxation of crypto transactions or enforcement against illegal exchanges. It must shift toward developing a nuanced policy framework that distinguishes between speculative assets and compliant, fiat-backed digital tokens. SEBI and RBI could collaborate on regulatory sandboxes for tokenized finance.
Amendments to FEMA may be necessary to explicitly govern how stablecoins can be used in cross-border trade, capital flows, or investment settlements. Most importantly, a clear roadmap for how the digital rupee and other digital currencies will co-exist—and possibly interoperate—needs to be developed.
From an investor’s standpoint, the implications are equally significant. Firms that align early with stablecoin infrastructure—whether through fintech partnerships, tokenized assets, or payment systems—may enjoy a first-mover advantage.
As fund flows globalize through these new rails, the very nature of capital market participation could shift. Watching how institutional funds, mutual funds, and large corporates react to this regulatory change in the US could offer early signals on where value may be created or disrupted.
The GENIUS Act does more than legalise a form of money. It legitimizes a new infrastructure for moving capital, accessing yield, and building programmable financial services. If India wants to stay competitive in this emerging digital financial architecture, it will need to act with both urgency and clarity.
The US has taken the first big step—India can either match that momentum or risk being left behind as capital, innovation, and credibility flow elsewhere.
Pratibha Kumari is an assistant professor at TAPMI Bengaluru. Views are personal.