India’s central financial institution, the Reserve Bank of India (RBI), has unveiled its framework for a fintech regulatory sandbox. While blockchain and sensible contracts are welcomed, the financial institution said that cryptocurrency and associated providers “may not be accepted for testing.”
RBI Welcomes Blockchain Tech
The RBI revealed its draft framework for a fintech regulatory sandbox Thursday. The central financial institution defined that one of many suggestions the inter-regulatory fintech working group, which it arrange in July 2016, got here up with is to introduce a framework for a regulatory sandbox (RS). The RBI clarified that this framework consists of “a well-defined space and duration where the financial sector regulator will provide the requisite regulatory guidance, so as to increase efficiency, manage risks and create new opportunities for consumers.”
The central financial institution proceeded to offer an inventory of progressive merchandise, providers, and know-how which might be thought-about for testing. In addition to cash switch providers, digital KYC, digital identification providers, AI and machine studying purposes, the listing consists of sensible contracts and “applications under blockchain technologies.”
The working group included representatives from the RBI, the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority, the Pension Fund Regulatory and Development Authority, the National Payments Corporation of India, the Institute for Development and Research in Banking Technology, choose banks and score businesses.
Crypto Excluded From Sandbox
While noting that some entities will not be appropriate for the sandbox “if the proposed financial service is similar to those that are already being offered in India,” the RBI famous an exception. Applicants that “can show that either a different technology is being gainfully applied or the same technology is being applied in a more efficient and effective manner” could also be thought-about for the sandbox, the financial institution described.
Nonetheless, it continued with “An indicative negative list” of merchandise, providers, and know-how “which may not be accepted for testing.” This listing consists of cryptocurrency, crypto belongings providers, crypto buying and selling, crypto investing, in addition to settling in crypto belongings. It additionally consists of preliminary coin choices and “any product/services which have been banned by the regulators/Government of India,” the central financial institution wrote.
RBI’s Unchanging Stance Toward Crypto
India’s central financial institution has by no means been a fan of cryptocurrency. It issued a press release in December 2013, cautioning crypto “users, holders and traders … about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to.” The financial institution issued one other assertion in February 2017, advising the general public that it had not given any license or authorization to any entity or firm dealing in cryptocurrency. It adopted up with one other assertion in December of the identical yr, reiterating its considerations relating to the “risk of virtual currencies including bitcoins.”
On April 5 final yr, the RBI revealed a press release on Developmental and Regulatory Policies, affirming that cryptocurrencies “raise concerns of consumer protection, market integrity and money laundering, among others.”
The following day, the central financial institution issued the notorious round banning all regulated entities from dealing in cryptocurrencies or offering providers to any individual or entity coping with cryptocurrency. Affected providers embrace sustaining accounts, registering, buying and selling, settling, clearing, lending, accepting cryptocurrency as collateral, opening accounts of exchanges coping with cryptocurrency and transferring cash in accounts referring to buy or sale of cryptocurrencies.
The ban went into impact in July final yr and numerous business individuals have filed writ petitions with the supreme courtroom to raise the ban. The courtroom is predicted to listen to the case on July 23, after repeatedly suspending it.
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