According to a report dated April 18, The Reserve Bank of India has come out to announce the terms and conditions of its regulatory sandbox. As per terms of the sandbox, blockchain can be tested across various applications. However – projects based on cryptocurrency has been categorically excluded.
Across the globe, sandboxes are used by regulators including the Financial Conduct Authority in the United Kingdom, which essentially enables fintech firms to put their innovations to test amongst a small userbase over a fixed period. RBI started reviewing its framework three years ago in order to respond correctly to the growing fintech market. The central bank of India concluded by saying “innovative technology” built on blockchain can be sampled by the public — giving the institution a chance to assess whether new regulations are needed to protect consumers.”
According to the RBI, with this arrangement, companies, as well as consumers, benefit from this arrangement. RBI further explained by saying that “While blockchain firms can test a product’s viability without the need for a larger and more expensive roll-out, the public could benefit from “reduced costs and improved access to financial services.”
However, the reports mention that “innovators may lose some flexibility and time” because of the sandbox process. The report further added that completing these tests do not ensure or guarantee that further approval by the regulatory will not be required. Reports indicate that the Reserve Bank of India lists platforms based on blockchain with mobile-based payments and digital identity software, data analytics and artificial intelligence.
Some specific sectors which are eligible for ‘innovative products and services’ are retail payments, money transfer services, digital KYC checks, smart contracts, and cybersecurity products. As per cryptocurrencies, platforms allowing trade of crypto assets and ICO (initial coin offerings) have been omitted. Also, services and products which have already been banned by the Indian regulators are not eligible to further apply.
As reported earlier, RBI stated that it would not provide services to any individual or firm dealing with cryptocurrencies. Five months past that, Zebpay (India’s largest crypto exchange) announced that the exchange had refrained from trading because of ‘extremely difficult’ conditions.
The Reserve Bank of India was pursuing the idea of coming up with its digital currency. However, these plans were parked at the beginning of the year. Due to consistent uncertainty concerning crypto regulations in India, The Apex court of India in the month of February gave a four-week deadline to issue regulations or face the threat of court releasing the judgment themselves.