- The RBI has denied creating a cryptocurrency research arm
- Their having done so had previously been reported by the Economic Times in August
- Despite public statements supporting blockchain technology, Indian regulations stifle industry growth
Back in August, it was reported that the Reserve Bank of India (RBI) had created a unit for the research and regulation of blockchain and Artificial Intelligence-related technology. The news made rounds all over the world, even being reported by the Economic Times, one of the most popular financial reporters in India.
By all indications and by the account of supposed inside sources at the Central Bank, the unit had been functioning for months.
However, the RBI has come out to deny these reports and has stated that no crypto-focused unit has ever existed within the organisation.
This all came to light when the bank responded to a right to information query (RTI) query from Coin Crunch owner Naimish Sanghvi.
This statement from the bank comes as a surprise considering they seem to have previously confirmed the news back in August right after the news was reported by the Economic Times.
The RBI had, at the time, revealed that it had created an inter-departmental group to determine the feasibility of the creation of a central bank digital currency (CBDC) through its Annual 2017-2018 report.
Now, they seem to be going back on their stance.
Another thing that makes this new surprising is that fact the government of India has been mostly open towards the idea of cryptocurrency.
The research arm of the RBI has previously published a research paper which stated that merits of blockchain technology for the financial sector.
The Central Bank’s Institute for Development and Research in Banking Technology (IDRBT) stated that India’s national currency, the Rupee, could be digitized through blockchain technology.
Earlier this year, there were calls for the rapid adaptation of blockchain technology by India’s prime minister, Narendra Modi.
However, public statements aren’t enough to properly push the adoption of cryptocurrency. In April, the RBI issued a ban on all regulated financial institutions from serving blockchain businesses, a move which significantly slowed down growth.
The effects of this were felt throughout the blockchain industry, with Zebpay, one of the biggest cryptocurrency exchanges, shut down. Their closing statement said:
“The curb on bank accounts has crippled our, and our customer’s ability to transact business meaningfully. At this point, we are unable to find a reasonable way to conduct the cryptocurrency exchange business.”