‘Crypto creates possibility of de-dollarisation’: CoinSwitch co-founder Ashish Singhal – Firstpost

The global push to regulate stablecoins is accelerating amid rising crypto activity in sanctioned economies. As governments race to formalise rules, the absence of unified global standards is increasingly being flagged as a systemic risk for financial stability and cross-border capital flows.

Major economies, including the United States, the United Kingdom and India among others, are stepping up efforts to establish comprehensive cryptocurrency frameworks. At some places such as Singapore and Abu Dhabi, stablecoins have already moved ahead with dedicated regulatory regimes.

The regulatory divergence has triggered concerns that fragmented oversight could enable arbitrage and weaken enforcement.

The Bank for International Settlements (BIS) has warned that such fragmentation risks destabilising global crypto markets. BIS General Manager Pablo Hernandez de Cos has called for “critical” international cooperation on stablecoins, cautioning that inconsistent regulatory frameworks could undermine financial integrity and create loopholes for cross-border misuse.

At the policy level, European officials are also pushing to reduce dependence on dollar-linked digital assets. French Finance Minister Roland Lescure has advocated greater adoption of euro-based stablecoins and tokenised deposits as alternatives to US-denominated instruments.

In India, crypto adoption is showing clear signs of market maturation, with older millennials and Gen X emerging as the fastest-growing investor segment, according to CoinSwitch report based on over 2.5 crore users. Investors aged 26–35 continue to dominate participation at 48 per cent, while the 35+ cohort is emerging as the fastest-growing segment.

Firstpost spoke to CoinSwitch co-founder Ashish Singhal on the use of cryptocurrencies in sanctioned economies, the evolving architecture of global crypto regulation, the prospects of de-dollarisation, and emerging trends in India’s digital asset market.

Edited excerpts:

Data shows higher crypto inflows and outflows in sanctioned regions such as Russia and Iran. What is driving this trend?

If you look at the global financial system, cross-border payments are largely dominated by the Swift network, which is heavily influenced by the United States. When countries face sanctions, their access to this system becomes restricted.

Cryptocurrencies, including Bitcoin and stablecoins, were originally designed as alternative payment mechanisms. In regions facing geopolitical restrictions, these assets are increasingly being used to facilitate transactions and, in some cases, bypass traditional financial rails.

That’s why we are seeing higher crypto activity in sanctioned economies like Iran or Russia. When conventional systems are inaccessible, countries explore alternatives — crypto being one of them.

However, it is important to note that crypto is also one of the most traceable asset classes. Transactions on blockchain are transparent and can be tracked across jurisdictions. With the right regulatory frameworks and monitoring tools, illicit activity can be significantly curtailed. This requires coordinated global efforts.

Global regulators have raised concerns about crypto’s risks and lack of regulation. How do you see the regulatory framework evolving?

Crypto, by its very nature, is a global asset class. No single country can regulate it effectively in isolation because it operates on peer-to-peer infrastructure across borders.

There is a clear need for a global regulatory framework. At the same time, individual countries will continue to have their own local rules. For instance, India has capital controls, so its regulations will reflect those priorities.

Globally, we are already seeing progress. The US, Europe, the UK, Japan, and Australia are developing frameworks and implementing compliance mechanisms like the “travel rule,” which ensures transparency in cross-border crypto transactions.

Going forward, regulation is expected to take a two-tiered shape: domestic frameworks aligned with national financial systems, and global coordination mechanisms to ensure seamless interoperability across borders.

A good analogy is UPI versus Swift. UPI works domestically, while Swift enables international settlements. A similar layered system could emerge for crypto over the next five years.

There is increasing discussion around de-dollarisation. Can crypto realistically challenge the US dollar, given the dominance of dollar-backed stablecoins?

Today, the crypto ecosystem is still heavily influenced by the US. Stablecoins like USDT and USDC dominate because they are backed by the US dollar and supported by strong financial infrastructure.

However, blockchain technology allows countries to create their own digital currencies or stablecoins linked to local currencies. Over time, we could see central bank digital currencies (CBDCs) or sovereign stablecoins emerge across countries like India, China, Japan, or those in Europe.

If multiple countries agree on settlement frameworks using these instruments, it could gradually reduce dependence on the US dollar.

So yes, crypto does create the possibility of de-dollarisation. But whether and how quickly that happens will depend on global coordination, regulatory alignment, and adoption by governments.

How do you view India’s progress on CBDC, and what role could it play in strengthening the country’s digital payments ecosystem?

In my view, India is taking a pragmatic approach. CBDC represents the next evolution of money — what we can call programmable money.

While systems like UPI appear real-time to users, the backend settlement between banks still takes time and involves reconciliation delays. CBDCs can eliminate these inefficiencies by enabling near-instant settlement.

This approach offers several advantages, including faster and more efficient transactions, reduced settlement risk, and lower instances of fraud and reconciliation challenges.

The Reserve Bank of India’s decision to use a controlled, private blockchain framework is also important. India is a capital-controlled economy, so maintaining sovereignty over monetary flows is critical.

CBDC has the potential to make money truly real-time and programmable, which could significantly enhance the financial ecosystem.

Crypto was once seen as a safe-haven asset like gold, but now moves more in line with risk assets. Has that narrative shifted?

A year ago, many believed crypto — especially Bitcoin — could act as “digital gold.” Gold has historically been a hedge during geopolitical uncertainty.

However, recent global tensions have shown that crypto hasn’t fully matured into that role yet. Instead, it has behaved more like a risk asset.

One key reason is liquidity. Crypto is one of the most liquid asset classes in the world, trading 24/7. When uncertainty hits, investors can quickly exit positions, which leads to sharper price movements.

That said, the long-term trajectory is still evolving. Over the past five years, crypto has become less volatile and seen wider adoption. It may still develop into a hedge asset over time, but at present, it behaves more like a high-risk, high-liquidity investment.

What trends are you seeing in India’s crypto market, particularly among young and new investors?

We are seeing strong participation from younger investors. The 26–35 age group accounts for around 48 per cent of participants, making it the dominant segment.

At the same time, older investors are the fastest-growing category, as they begin to allocate a small portion — typically two–three per cent — of their portfolios to crypto.

We are also seeing rising participation from women investors, which is a positive sign for broader adoption.

A more detailed report, including state-level trends and gender participation data, will provide deeper insights into how the Indian crypto market is evolving.