Nikhil Kamath, co-founder of Zerodha – India’s biggest brokerage – has spoken out against the idea of India using stablecoins backed by the US dollar. Instead, he’s proposed a different approach: a digital token linked to gold, using the large amounts of gold many Indian families already own.
On May 11, 2026, Nithin Kamath shared on X (formerly Twitter) that while the US dollar remains dominant globally, many countries are taking steps to reduce their reliance on it. These steps include purchasing gold, using currencies other than the dollar for trade, and developing alternative payment systems to SWIFT. He highlighted India’s Unified Payments Interface (UPI) as a particularly successful example of this trend.
He then addressed those who support stablecoins pegged to the US dollar. He stated that, in his view, relying on these types of stablecoins isn’t a good long-term strategy for India. However, he also praised the Modi government and regulators for correctly handling the situation despite significant pressure.
His post quickly gained over 63,000 views and became part of an ongoing discussion about the future of digital currency in India.
What Kamath is actually saying
Kamath isn’t saying stablecoins are bad in general, but that those pegged to the US dollar could harm India’s financial goals in the long run.
Economists studying developing countries often worry about this. When people and businesses in a country regularly use digital money measured in U.S. dollars, it increases that country’s reliance on the American financial system – even if actual dollar bills aren’t used.
India has worked for years to create its own payment systems, like UPI, to lessen its reliance on other countries. If stablecoins like USDT or USDC became widely used, it would essentially move India backward in terms of financial independence.
Jamdat praises India’s UPI system for good reason. It now handles billions of transactions every month, 24/7, covering everything from small street vendor payments to large business deals. This kind of reliable domestic payment system is rare globally, and it’s exactly what made dollar-based stablecoins so appealing in places like Southeast Asia, Latin America, and Africa.
India doesn’t need dollar-based stablecoins. It has already created its own, superior domestic system that’s fully controlled by the government.
The Gold stablecoin proposition
Kamath then asked a question that’s already sparked a lot of debate among people in finance and the crypto world.
Alternatively, a stablecoin backed by gold could allow people to earn returns on the gold many Indian families already own. I’m not an expert on this, but it’s an interesting idea to consider.
The question is more substantive than its casual framing suggests.
A recent HSBC study estimates that Indian families collectively own around 25,000 tonnes of gold. This is more than the total gold held by the ten largest central banks globally.
According to a report from Morgan Stanley in June 2025, Indian households collectively held 34,600 tonnes of gold, worth around $3.785 trillion. This amount represented almost 89% of India’s total economic output (GDP) at the time.
Most gold isn’t being used to earn money; it’s simply stored in places like homes, safe deposit boxes, and religious buildings.
As an analyst, I see what Kamath is proposing as a really interesting evolution of traditional gold monetization. Essentially, it’s about creating a digital token representing physical gold, but leveraging blockchain technology to make it far more useful. Unlike simply storing gold, this token would allow holders to earn returns on their investment, and benefit from the increased liquidity, flexibility, and wider access that blockchain provides.
The concept of tokenized gold isn’t completely new on the world stage. Products like Tether Gold (XAUT) and PAX Gold (PAXG) are already available, but they’re mainly used for investing, not for earning returns based on everyday gold ownership.
Kamath suggests a unique approach for India: a way to transform the nation’s large private gold holdings into useful financial resources without having to rely on foreign financial systems.
The regulatory context: A house divided
Kamath’s comments come as Indian organizations disagree on how to handle stablecoins.
India’s central bank, the Reserve Bank of India (RBI), has clearly stated its preference for digital currencies issued by governments (CBDCs) over privately created stablecoins. In its December 2025 report on financial stability, the RBI explained that CBDCs are essential to maintain a unified monetary system.
In late 2025, Reserve Bank of India (RBI) Governor Sanjay Malhotra clearly stated that India won’t simply follow the United States’ lead on stablecoins. He highlighted India’s existing payment systems – UPI, NEFT, and RTGS – as proof that the country already has the same capabilities that dollar-based stablecoins promise elsewhere.
However, the Finance Ministry seems to be taking a different approach. India’s Economic Survey for 2025-2026 suggested potential regulations for stablecoins, indicating that at least some government officials are willing to consider this emerging technology.
According to The Crypto Times, India has once again put its plans for cryptocurrency regulation on hold. This delay highlights the disagreement between the Reserve Bank of India (RBI), which strongly opposes crypto, and the Finance Ministry, which is more willing to consider it.
Considering the current situation, Kamath’s comments aren’t just his personal thoughts. They add to the ongoing discussion about policy, coming from a well-respected leader with a strong background in investment and financial technology.
Not his first time on this track
Kamath has spoken publicly about alternatives to traditional, government-backed digital currencies using gold as backing before. This isn’t the first time he’s addressed this topic.
In January 2023, he paid attention to news reports about Iran and Russia considering a new stablecoin – a digital currency backed by gold – to facilitate trade between their countries. This currency became known as the “token of the Persian Gulf region.”
Kamath described the situation as potentially marking the very beginning of a new global economic system, and he was surprised by the lack of attention it was getting from the international press.
My previous comment simply noted what was happening, rather than suggesting what *should* happen. However, his post from May 2026 takes a different approach. It directly focuses on India’s regulations and is aimed at people within the country—specifically, regulators and those promoting stablecoins—instead of discussing global issues.
The broader picture: Stablecoins at $320 billion and rising
The fact that Kamath made these comments now is important, especially considering how quickly stablecoins are growing worldwide. The stablecoin market has seen huge gains recently, reaching around $320 billion by April 2026 – a jump of about 56% since the beginning of 2025, according to data from DeFiLlama. Tether (USDT) alone hit a new high of $189.6 billion in April.
The increasing popularity isn’t just from individual investors, but also from larger financial institutions. Companies building the core infrastructure of finance – like Interactive Brokers, which will allow funding accounts with stablecoins in early 2026, and Mastercard, which recently partnered with Yellow Card to expand stablecoin payments in Africa – are starting to see dollar-backed tokens as a legitimate way to make payments.
The growing acceptance of dollar-based stablecoins by major institutions actually makes Kamath’s concerns *more* significant. As these stablecoins become more integrated into how the world makes payments, it will be increasingly difficult for any country to oppose their influence – particularly if people within that country are already using them despite any official restrictions.
Market data shows that India received over $10 billion in stablecoin investments during the first six months of 2025, and most of this money was in U.S. dollars.
What happens next
Kamath hasn’t offered a specific solution or plan. Instead, he’s raised an important question and suggested a general approach, openly admitting he doesn’t have all the answers.
Creating a stablecoin backed by gold owned by individuals raises several key challenges. Verifying the gold’s authenticity and securely storing it on a large scale would be difficult. It’s also unclear which agency would be responsible for issuing the coin, or how any profits would be shared. Finally, it remains to be seen whether India’s central bank, which has been wary of private stablecoins, would be more accepting of a token backed by a domestic asset like gold.
We don’t have answers to those questions yet, but the discussion has begun, and it’s happening in a very public way that’s hard to miss.
Given that the country holds potentially the world’s biggest private gold reserves, it was only a matter of time before someone suggested turning that wealth into a digital asset that could generate income – all without relying on the US dollar. Kamath has now proposed this idea.
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2026-05-12 16:22