Nasscom, Fintechs Urge India’s Central Bank To Include Crypto In Regulatory Sandbox

News | May 17, 2019 By:

India’s National Association of Software and Services Companies (Nasscom) and FinTech startups are urging the Reserve Bank of India (RBI) to include cryptocurrencies in its FinTech regulatory sandbox framework.

Last month, RBI released the draft framework for its FinTech regulatory sandbox, which would allow testing of innovative products/services/technology, including blockchain, smart contracts, artificial intelligence (AI) and Machine Learning applications. The draft excluded any testing that involves cryptocurrency services, trading/investing/settling in crypto assets, and Initial Coin Offerings (ICO).

In response, IT industry trade body Nasscom said that since cryptocurrencies are important components of the blockchain technology, they should be included in RBI’s FinTech regulatory sandbox. The trade body argued that including cryptocurrencies will allow the RBI to gauge the risks associated with cryptos, noting that other countries like the UK are supporting such innovations in their sandbox.

“The decision to keep cryptocurrencies, trading of cryptocurrencies and initial coin offerings out of purview of the regulatory sandbox, is still not clear,” Nasscom said.

Founders who have been part of regulatory sandboxes in other countries have also commented on the proposed regulatory sandbox framework for the FinTech industry.

Ramani Ramachandran, CEO of Singapore-based blockchain startup ZPX, which is part of the regulatory sandbox of Bahrain’s central bank, said that with Bahrain, the approach is that startups enter the sandbox and if their developments pan out, they are given licences to start operating.

Nitin Sharma, founder of Incrypt Blockchain, said that his company had submitted a report to the regulator on a blockchain-specific sandbox, which included specifics on policies and procedures.

“Our research suggested that by restricting access to certain qualified digital asset startups, India could allow experimentation without worrying about any significant risks,” said Sharma.