Cryptocurrencies Not Welcome at Reserve Bank of India (RBI) New FinTech Regulatory Sandbox
On Thursday, April 18, 2019, the Reserve Bank of India (RBI) released a report on what they refer to as the “Regulatory Sandbox” (RS), which explores the different facets of FinTech.
The reason for such publication stems for the general public as reported by RBI. More specifically, a draft was first released in February 8, 2018 to see what the general public had to say.
One of the key recommendations that supposedly rose from the several comments is the need for an RS:
“with a well-defined space and duration where the financial sector regulator will provide the requisite guidance, […] manage risks and create new opportunities for consumers.”
Some of the products and services that the RS will supposedly be testing include:
“retail payments, money transfer services, marketplace lending, digital KYC, smart contracts, financial inclusion products, cyber security products, etc.”
While it’s important to explore what the RS will include, it is just as important to see what has been excluded and it looks like anything directly associated with cryptocurrencies have made the list.
As per the claims made, cryptocurrencies and related services, and ICOs have been excluded. This is in part due to the fact that they (amongst others) are “already being offered in India.”
If said services can be proven as being unique either through the use of “different technology” or existing technology but in a “more effective manner”, then they will be considered under the RS. But in the eyes of the RBI, neither condition holds for cryptocurrencies.
Such a decision from the RBI does not come too much of a surprise considering the fact that they have frowned upon cryptocurrencies for a long period of time. In particular, the bank either kept postponing on providing ways in dealing with cryptos or have completely shut it down.
They’ve goes as far as making sure that Indians were made aware of potential consequences that arise from taking part in crypto related activities.