Nikhil Kamath, co-founder of Zerodha, and Ashish Singhal, co-founder of CoinSwitch, recently discussed the growing potential of stablecoins linked to gold within India, sharing their insights on X.
Nikhil Kamath proposed using stablecoins backed by gold to unlock the value of the significant amount of gold Indian families own and earn returns on it. He cautioned that relying heavily on stablecoins backed by the US dollar could be risky for India in the future. He commended the Modi government and financial regulators for not giving in to pressure to prioritize dollar-backed stablecoins, and highlighted the strength of India’s UPI payment system.
Ashish Singhal thanked Kamath for bringing up the problem and then explained the current situation, including the specific challenges in India.
Global gold-backed crypto stablecoins already exist
According to Singhal, stablecoins backed by gold are currently being traded. These include PAX Gold (PAXG) and Tether Gold (XAUT), which together make up a market worth several billion dollars. Other platforms, like Kinesis Gold, even offer rewards for holding tokenized gold.
India’s households and temples collectively own about 25,000 tonnes of gold, primarily in the form of jewelry, family heirlooms, and temple reserves. This gold largely remains unused and is estimated to be worth around $2.4 trillion, and potentially even more given current gold prices.
Major structural challenges for India
According to Singhal, accessing this wealth in gold isn’t just about cryptocurrency or technology – it’s a fundamental problem with how gold is held. Projects like PAXG depend on high-quality gold bars stored securely in regulated facilities, following standards set by the LBMA. However, in India, much of the gold is in the form of 22-karat jewelry, family heirlooms, gold owned by temples, and is spread out among many different owners. This makes it difficult to safely store and standardize the gold.
He pointed out another important limitation: gold itself doesn’t typically earn any returns. To get a yield on a stablecoin backed by gold, you’d need to use financial tools like loans, complex investments, or rewards programs. However, this adds the risk that those involved in these tools might not fulfill their obligations.
Singhal agreed with the general idea of the project, but pointed out that putting it into practice in a country as large as India would be much more difficult than anticipated.
Singhal acknowledged that adding an Indian Rupee (INR) trading pair to the stablecoin would make it more useful in India. However, he stressed that bigger issues still need to be addressed, like secure storage, consistent quality, and building trust. A major problem is that most gold in India isn’t the standardized, high-quality gold needed for easy and reliable tokenization, requiring clear quality controls.
Implications for India’s crypto and RWA ecosystem
With increasing interest in representing real-world assets as digital tokens, a stablecoin backed by gold could benefit India in several ways. It could lower the country’s gold import costs, improve its balance of payments, bring more personal savings into the formal economy, and help reduce reliance on the US dollar. Additionally, it could open up new possibilities for earning returns and expanding access to financial services through decentralized finance.
Achieving this level of success requires supportive regulations, secure ways to hold gold, cutting-edge identity verification, and approaches that acknowledge India’s strong traditions around owning physical gold.
As a researcher following the Indian crypto space, I found the conversation between Nikhil Kamath and Ashish Singhal particularly helpful. They offered a really grounded and practical look at gold tokenization – something that’s important for regulators, crypto companies, investors, and anyone involved in shaping policy around it.
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2026-05-14 11:02