Blockchain Unit Formed By India’s Central Bank

Blockchain, News, Regulation | August 27, 2018 By:

The Reserve Bank of India (RBI), the country’s central bank, has formed a new unit to study emerging technologies such as blockchain and artificial intelligence (AI).

According to a source familiar with the RBI’s plans, the central bank set up a unit last month and appointed a chief general manager to lead it. The source added that the new unit will research and possibly draft rules and supervise new emerging technologies in the future.

“As a regulator, the RBI also has to explore new emerging areas to check what can be adopted and what cannot,” the source told The Economic Times. “A central bank has to be on top to create regulations. This new unit is on an experimental basis and will evolve as time passes.”

In his budget speech in February of this year, India’s finance minister Arun Jaitley said that the government will explore the use of blockchain technology proactively for ushering in digital economy. While Jaitley is bullish on blockchain technology, he said that the government does not recognize cryptocurrency as legal tender or coin. He said that they will take all measures to eliminate the use of crypto-assets in financing illegitimate activities or as part of the payment system.

The finance minister’s speech was followed by a circular issued by the RBI in April prohibiting financial institutions from providing banking services to individuals and organizations dealing in cryptocurrencies. The RBI crypto ban, which came into effect on July 5, has been challenged by several crypto exchanges in the supreme court. A final date for hearing the matter has been set for September 11. In the same month, India is also expected to release the final draft of its crypto regulation laws.