Crypto Lobbying Groups Urges Reserve Bank Of India to Reconsider The Bitcoin Ban
India tech industry lobby associations and founders of startups have asked India’s banking regulator to incorporate crypto assets in its suggested regulatory sandbox framework for the fintech industry.
The concept of sandboxes is also being used in the digital economy arena, to refer to regulatory sandboxes: testing grounds for new business models that are not protected by current regulation or supervised by regulatory institutions. These testing grounds are especially relevant in the fintech world, where there is a growing need to develop regulatory frameworks for emerging business models.
The purpose of the sandbox is to adopt compliance with strict financial regulations to the growth and pace of the most innovative companies, in a way that doesn’t smother the fintech sector with rules but also doesn’t diminish consumer protection.
RBI’s sandbox will begin the testing process with 10-12 selected entities focusing on financial inclusion, payments, and lending, digital KYC, etc. The cohorts may run for varying time periods, but should ordinarily be completed within six months.
The regulatory sandbox would be within a well-defined space and duration where the RBI will provide the requisite regulatory guidance, so as to increase efficiency, manage risks, and create new opportunities for consumers.
However, for a project on FinTech at this day and age to not include crypto is absurd. But, absurd is the only word that can be used to describe Indian regulators relationship with cryptocurrencies. A Nasscom representative said:
“Since cryptocoins 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. The decision to keep cryptocurrencies, trading of cryptocurrencies and initial coin offerings out of the purview of the regulatory sandbox is still not clear.
One of the lobby group that is making this push to incorporate cryptos in the Fintech sandbox is Payments Council of India (PCI). Naveen Surya, chairman emeritus of PCI stated:
“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.”