The Reserve Bank of India (RBI), India’s Central Bank, has failed the Indian cryptocurrency yet again! RBI recently released its draft framework for regulatory sandbox in the fintech space. However, it has once again left the cryptocurrency businesses out of the list of fintech businesses that will be considered for the regulatory sandbox.
The regulatory sandbox refers to a controlled testing environment for businesses subject to certain regulatory relaxations. The purpose of the sandbox is to give innovators a free testing ground for new technologies and help regulators get up to speed with new technology areas. It is a well-established mechanism used by many countries across the globe to promote startups in high growth areas.
In its list of exclusions from sandbox testing, the RBI has named the following areas, among others:
- Cryptocurrency/Crypto assets services
- Trading/Investing/Settling in crypto assets
- Initial Coin Offerings
Interestingly, the regulatory sandbox is considering smart contracts and applications built on blockchain technology. This shows that RBI is still in the age-old ‘blockchain, not crypto’ mindset. India’s Central Bank has not displayed any serious commitment towards understanding the cryptocurrency industry, introducing a banking ban without performing adequate research. At a time when companies like JP Morgan and Facebook are entering the space, RBI’s continued ignorance is disappointing, to say the least. You can read the entire report here.
Let’s hope the new government after the Lok Sabha Elections 2019 can change course! We have done a detailed analysis of RBI’s new framework for sandbox testing in our video here: