The New Regulatory Sandbox By Indian Regulatory Accepts Blockchain And Excludes Crypto

Marco Green
April 23, 2019

The draft released by RBI said that "By providing a structured and institutionalized environment for evidence-based regulatory decision-making, the dependence of the regulator on industry/stakeholder consultations only is correspondingly reduced".

By The Reserve Bank of India (RBI) has published its official document on a draft framework for fintech regulatory sandbox entitled "Draft Enabling Framework for Regulatory Sandbox". Sandboxes are used by regulators around the world, including the Financial Conduct Authority in the United Kingdom, so fintech companies can put their innovations to the test with a small number of consumers over a set time period.

The Reserve Bank of India (RBI) published its draft framework for a regulatory sandbox on Thursday, a move that comes almost three years after it first formed a working group to look into fintech solutions.

This move by the RBI has made it further clear that the central bank is still not completely satisfied by cryptocurrencies and doesn't want to accept or approve them unless it is completely satisfied that they won't be used for malicious activities. Thus, giving the institution the right to access whether the latest regulations are required to protect consumers.

"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", the central bank said in the draft, which refers to each end-to-end sandbox process as a cohort.

Earlier this year, reports suggested that the Securities and Exchange Board of India (SEBI) is considering setting up a regulatory sandbox to facilitate regulated use of innovative technologies such as blockchain and artificial intelligence in the securities market.

The RBI further states that both fintech companies and consumers will be benefited from this arrangement. This allows blockchain firms to "test product's viability without any requirement of a huge and more expensive roll-out".

The document which has been available online since yesterday elaborates on the way in which the regulatory sandbox will be applied to the local fintech sector under the strict watch of the RBI. This list includes cryptocurrency, crypto assets services, crypto trading, crypto investing, as well as settling in crypto assets.

RBI is checking various cryptocurrency projects, banning Indian banks from doing business with the crypto startups past year after granting various warnings for such activity.

Other reports by Click Lancashire

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