Zerodha co-founder Nikhil Kamath has raised concerns over the growing push for dollar-backed stablecoins in India, saying such instruments may not suit the country's long-term financial interests. According to reports from LiveMint, Kamath instead suggested that India could explore a gold-linked stablecoin model that may help unlock value from the massive quantity of idle gold held by households across the country. The investor argued that while stablecoins pegged to the US dollar are gaining popularity globally for cross-border payments and digital transactions, they could gradually strengthen the dominance of the dollar in emerging economies like India. Kamath's primary concern is that dollar-backed stablecoins could gradually strengthen the dominance of the US dollar in emerging economies like India, potentially reducing monetary autonomy.
Praising UPI as a transformational success, Kamath credited Indian regulators and the Modi government for taking a cautious approach toward dollar-backed digital assets despite increasing global adoption. As reported by LiveMint, Kamath said, "UPI has been incredible for India to say the least," and added, "To all the smart folk, some friends of mine who champion the need for dollar-backed stablecoins, this seems like a bad idea, long term, for India." The investor also credited policymakers for resisting the push toward such instruments, stating, "Credit where it's due, to Modi govt and Indian regulators, you probably got this one right in the face of a lot of pressure."
Instead of relying on dollar-backed tokens, Kamath floated the idea of a gold-based stablecoin designed specifically around India's unique economic and cultural landscape. According to LiveMint, India is one of the world's largest consumers and holders of gold, with households estimated to own thousands of tonnes of the precious metal. Much of this gold, however, remains idle in lockers and homes, generating little or no financial return. Kamath suggested that blockchain technology could potentially help monetise these dormant gold holdings through a gold-linked digital token, stating, "On the other hand, if there were a gold-based stablecoin, and one could monetize the unutilised gold in Indian households to return a yield, don't know enough to talk about this, but thoughts?" While Kamath admitted he is not an expert on the subject, the idea has sparked wider discussion about whether future digital financial products could eventually be backed by real-world assets such as gold instead of fiat currencies.
India has so far maintained a guarded approach toward private cryptocurrencies, with the government and the Reserve Bank of India repeatedly highlighting concerns around financial stability, capital flows and investor protection linked to unregulated digital assets. As reported by LiveMint, India has aggressively pushed its own digital public infrastructure initiatives, with UPI emerging as one of the world's largest real-time payment systems, while the RBI continues to pilot the digital rupee as part of its central bank digital currency (CBDC) programme. Kamath's remarks now add a fresh layer to the debate about whether India's digital currency future should be tied to the US dollar, sovereign-backed digital rupees, or potentially even gold-backed blockchain assets rooted in India's traditional savings culture. The comments come at a time when several countries, fintech firms and crypto companies are increasingly exploring stablecoins as a cheaper and faster alternative to traditional payment systems.
