- The report explores different aspects of Fintech
- RBI has shown a bias towards blockchain
- The Supreme Court judgment still being awaited
India’s Central Bank, the Reserve Bank of India (RBI) has released the terms for its regulatory sandbox. The terms of the sandbox include several applications related to blockchain technology but all cryptocurrency-related projects seem to have been excluded.
One of the Main Recommendations
According to an official report released by the Reserve Bank of India on Thursday, April 18, 2019, on what is referred to as the “Regulatory Sandbox” (RS), the document explores different aspects of FinTech.
According to the report, the reasons for their publication is to educate the public and is a follow-up of a first draft that was released on February 8, 2018, when the public was given an opportunity to give their feedback. Regulatory Sandbox is supposedly one of the main recommendations that were gathered from many comments. The report says:
“The proposed financial service to be launched under the RS should include new or emerging technology, or use of existing technology innovatively and should address a problem, or bring benefits to consumers.”
Rapidly Evolving Fintech Market
Sandboxes are normally used by financial regulators worldwide to enable Fintech companies to put their innovations to test using a smaller number of consumers over a pre-agreed upon time period.
India’s RS comes about three years after the RBI reviewed its existing framework in response to the dynamics introduced by the rapidly evolving Fintech market. According to the RS, India’s Central Bank concludes the “innovative technology” the public can sample build on blockchain technology, giving institutions an opportunity to assess whether there is a need for new regulations to protect consumers.
The RS, however, doesn’t entertain any crypto-related projects including cryptocurrencies or crypto asset services, crypto trading, investing or settling or Initial Coin Offerings (ICOs) besides several other more traditional financial services. As per the document, the Central Bank is interested in projects relating to retail payments, money transfer services, digital identity, mobile payments, and financial inclusion.
Supreme Court Is Reviewing the Matter
The RBI has for a long time had a negative stance towards cryptocurrencies and barred Indian banks from offering banking services to any business or individuals trading in cryptocurrencies last year after giving several warnings. Local startups filed petitions to push back the ban and the country’s Supreme Court is reviewing the matter and it’s not yet clear when the final decision will be delivered.
The RBI, which has shown a bias towards blockchain tools, launched a unit dedicated to research on the regulatory framework for blockchain last August. There was information that the RBI was pursuing releasing its own digital currency but the plans were put on hold at the beginning of the year. The Supreme Court gave Indian Authorities a four-week deadline last February to create regulations or face the threat of the court releasing a judgment themselves.
