Core Viewpoint - The Reserve Bank of India (RBI) is adopting a cautious approach towards cryptocurrencies and stablecoins due to their associated risks [1][6]. Regulatory Approach - The Indian government is yet to decide on the regulation of cryptocurrencies, with a working group established to evaluate how to handle crypto assets in the country [4]. - India is leaning towards maintaining partial oversight of cryptocurrencies rather than creating comprehensive legislation, citing concerns over systemic risks [5]. Digital Innovations - The RBI has a more accommodating stance towards digital innovations such as the Unified Payments Interface (UPI) and digital lending, contrasting with its cautious approach to cryptocurrencies [2]. Market Context - U.S. dollar-backed stablecoins have a market capitalization exceeding $300 billion, while the overall cryptocurrency market cap has surpassed $4 trillion [3]. - The rising popularity of U.S. dollar stablecoins is expected to pose challenges for global monetary policy in the coming year [2]. Trading Environment - The RBI's warnings about the risks associated with cryptocurrencies have led to a near freeze in trading between India's formal financial system and cryptocurrencies [6].