Fintech 2026

INDIA Trends and Developments Contributed by: Shilpa Mankar Ahluwalia, Purva Anand and Ansh Jain, Shardul Amarchand Mangaldas & Co

vised trust with standard valuation, governance and reporting, SEBI has ensured that such products oper - ate in a regulated space to protect investors, while creating a clear pathway for tokenised units without reinventing the rulebook. CBDC On the retail side, the digital rupee (e₹) has grown sharply through 2024 and 2025. Around 19 banks and several million users now participate. The RBI has enabled small-value offline transfers using e₹ so payments can work without internet, and program - mability that allows purpose-bound transfers and tar - geted disbursements. State governments have tested programmable e₹ for welfare schemes to ensure that benefits are spent only with approved merchants. This aims to cut leakages and improve audit trails. Most recently, in February 2026, India’s first CBDC- based Public Distribution System pilot in Gujarat was launched, covering over 26,000 families across four cities; it uses programmable digital rupees to deliver food subsidies directly to beneficiaries’ wallets. Offi - cial publications indicate that e₹ in circulation reached about INR10 billion by March 2025. The wholesale and retail CBDC tracks have differ - ent but complementary roles. Retail CBDC improves access and financial inclusion. Wholesale CBDC pro - vides the settlement backbone for tokenised markets, reducing reliance on private settlement bank risk and enabling atomic settlement. Cross-border CBDC use is a live area of interest. India receives large inward remittances, and current pro - cesses can be slow and costly. International pilots show that near-instant cross-border payments are technically possible when central banks agree on common rules. However, issues such as sanctions screening, data sharing and alignment on compliance remain. A practical next step is bilateral or limited- group pilots for CBDC transfers. Stablecoins and Crypto: India’s Position and Global Context While India is advancing CBDC, its stance on stable - coins and crypto-assets is cautious. Stablecoins are not legal tender and are not recognised for payments. Individuals may hold them, but activity is channelled

to compliant venues. Two policy moves define the domestic framework. The first is anti-money-laundering (AML) compliance. Since March 2023, businesses that exchange cryp - to-assets (including stablecoins) for fiat, exchange one crypto-asset for another, transfer crypto-assets, provide safekeeping or control, or participate in or provide services for an issuer’s sale are “reporting entities” under AML law. They must register with the Financial Intelligence Unit, carry out customer due diligence, implement travel-rule messaging and file suspicious transaction reports. Enforcement has con - tinued against offshore platforms serving Indian users without registering. Several operators have responded by stopping India-facing activity or by seeking to regu - larise their position. The regulatory message is clear: if a platform wants to serve Indian users, it must accept Indian AML oversight. The second is tax. From 2022, income from trans - fers of “virtual digital assets” (including stablecoins) is taxed at a flat 30%. Losses cannot be set off. All transactions face a 1% tax deducted at source. The regime is intentionally strict. It discourages specula - tive trading and channels activity to entities that oper - ate within the rules. It has changed user behaviour: reported volumes on compliant domestic exchanges now form a higher share of visible activity, and peer- to-peer flows outside supervised venues have drawn greater bank scrutiny. Against this domestic regime, the global context has shifted sharply in recent years. The European Union has moved from drafting to implementing a compre - hensive crypto-asset regime with a focus on regulat - ing stablecoins. Hong Kong has brought stablecoin issuers into a dedicated licensing perimeter and con - tinued to refine licensing for exchanges and custodi - ans. In the United States, federal rules on payment- stablecoin issuers advanced in 2026. The common thread is convergence: well-backed, redeemable fiat- referenced tokens with strong governance and segre - gation standards are being permitted under prudential guardrails. Exchanges and custodians are being held to standards closer to those in traditional markets.

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