In April 2019, the Reserve Bank of India [RBI] had announced that it was working on ‘Draft Enabling Framework for Regulatory Sandbox’. This draft had excluded Cryptocurrency, Initial Coin Offering, credit registry, and other crypto-related assets and there had been rumors of the government of India banning crypto.
According to reports, various technology industry lobby groups and Fintech startups have asked the RBI to consider/include cryptocurrency and other related crypto-assets in the regulatory sandbox framework. The government had been supporting the distributed ledger technology, on which cryptocurrency and blockchain are based on. Nasscom, the IT industry trade body said:
“Since crypto coins and tokens are an important component of the blockchain technology, the draft regulations appear to exclude testing of smart contracts and other approved blockchain technology under the sandbox.”
It further added:
“The decision to keep crypto-currencies, trading of crypto-currencies and initial coin offerings out of the purview of the regulatory sandbox, is still not clear.”
Nasscom argued the regulators in the UK support such innovative steps in their sandbox and addition of crypto will enable RBI to gauge the risk involved with crypto. Along with Nasscom, Payment Council of India [PCI] also chimed in to suggest a more open structure and noted that since there was no outright ban of crypto in the country yet, it should be a part of the sandbox. The ex-chairman of PCI, Naveen Surya said:
“The boundaries can’t be defined right away. The discussion has been on how an open framework can be created instead of a subset of existing laws, because then we wouldn’t be achieving the innovation objective. Ideally, they shouldn’t have such large exclusions.”
These developments occur in the ever-chaotic and confusing crypto realm of India. It remains to be seen if this nudge from Nasscom and PCI will have a positive effect.