Nasscom, the tech industry’s lobby group, asked RBI to include cryptocurrency and crypto assets in the newly proposed regulatory sandbox for the fintech industry.
The Reserve Bank of India had published a ‘draft enabling framework for regulatory sandbox’ on April 18, 2019, which excluded cryptocurrency, initial coin offerings, and cash registry. The central bank had invited the stakeholders to voice their opinion of the guidelines by May 8, 2019.
“Since crypto coins and tokens are an important component of the blockchain technology, the draft regulations appear to exclude testing of smart contracts and other approved blockchain technology under the sandbox,” said IT industry trade body Nasscom.
“The decision to keep cryptocurrencies, trading of cryptocurrencies and initial coin offerings out of the purview of the regulatory sandbox is still not clear.”
The trade body also pointed out how the regulatory sandbox in countries such as the UK allow for such innovation. They believe that the RBI could get a better picture of the risks by including cryptocurrencies and crypto assets in the sandbox.
The Payment Council of India has also expressed their views on a more open structure for the sandbox. Naveen Surya, ex-chairman of PCI, stated that “The boundaries can’t be defined right away. The discussion has been on how an open framework can be created instead of a subset of existing laws because then we wouldn’t be achieving the innovation objective. Ideally, they shouldn’t have such a large exclusion.”
Founders who have been in regulatory sandboxes in other countries have also weighed in on the topic. They believe that by restricting access to certain qualified digital asset startups, experimentation can be done without any serious risks.
Blockchain technology has the potential to resolve issues involving security and governance with applications such as smart contracts and multi-party financial transactions and enabling digital identity.
The Central Bank of India has been trying to stymy the advent of cryptocurrency and crypto assets in the country and have received backlash from the public. We’ll have to wait and watch how this saga will unfold.