Impact of Cryptocurrency on Financial Systems and Economic Stability in India: A Sustainable Financial Innovation Perspective

Abstract

This is a descriptive financial analytics study, which explores analysed data that helps us realise the influence of cryptocurrency on many fronts of the financial system and economic stability in India. Two indices are involved in the analysis: Bitcoin price dynamics and the Global Crypto Adoption Index (2024). The results show that India comes out on top in the world for cryptocurrency adoption and there is a high level of integration of digital assets within its financial ecosystem. Nevertheless, Bitcoin price trend analysis reveals significant volatility that captures the speculative characteristics of cryptocurrency markets and the financial risk involved in them. According to the study, apart from aiding further financial inclusion, greater digital innovation and facilitation in moving towards a technology-driven finance system state, the improved access and efficiencies of cryptocurrency also represent both an opportunity and risk for sustainable finance by impacting positively on accessibility and possibly negatively on economic stability, environmental sustainability and monetary policy. This paper ends by arguing the importance of a regulatory framework that is both innovation-friendly, and balances this with efficiency on the costs involved in technology transfers and investor protection interests.