The Reserve Bank of India (RBI) published a report on introducing a regulatory sandbox to deeply study and respond to dynamics of the evolving nature of Financial Technology (FinTech).
To be fairly candid, this report was long awaited by a lot of people, especially the cryptocurrency community. This report talks about establishing a regulatory sandbox pertaining to a particular field. The report defines, “A regulatory sandbox (RS) usually refers to live testing of new products or services in a controlled/test regulatory environment for which regulators may (or may not) permit certain regulatory relaxations for the limited purpose of the testing. The RS allows the regulator, the innovators, the financial service providers (as potential deployers of the technology) and the customers (as final users) to conduct field tests to collect evidence on the benefits and risks of new financial innovations, while carefully monitoring and containing their risks.”
However, there is some bad news for the cryptocurrency community. The regulatory sandbox applies to areas such as retail payments, money transfer services, marketplace lending, digital KYC, financial advisory services, wealth management services to name a few. However, it will exclude, areas such as credit registry, credit information, cryptocurrency/crypto assets services, trading/investing/settling in crypto assets, Initial Coin Offerings, etc. Interestingly, the RBI is okay about studying blockchain under this sandbox.
Nischal Shetty, the CEO of cryptocurrency exchange WazirX told Crypto-News India, “A crypto sandbox would have helped Indian entrepreneurs participate more freely in building blockchain based applications. What’s confusing is that the draft speaks about blockchain being allowed but crypto not being allowed. Now that’s a clear proof of the misunderstanding of blockchain. Without crypto, public blockchain projects cannot be built.”
While this news will come as a blow, to some of the people in the cryptocurrency community, especially people who have been trying to campaign day and night asking the government to bring about regulation, the first question that comes to mind is: Does this take us to Square One?
This news is disappointing, because, last month, we had reported that the Central Bank had announced that it would be coming with a regulatory sandbox for fintech startups of the country within 2 months. We had speculated that if crypto was involved in that regulatory sandbox, we were highly likely to get a positive cryptocurrency regulation in place (though nothing could be guaranteed at this point).
Considering that the verdict is yet to be passed in the Supreme Court, and the RBI refusing to co-operate, does this mean the community will be left in the lurch, again?
We reached out to some major players in the industry. We’ll update the story when they respond.
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