Sometime ago I had reported about RBI developing a regulatory sandbox for startups in the FinTech space including blockchain startups. Now it has published its framework for startups who wish to apply for the sandbox and sadly cryptocurrencies have been excluded.
I had a tiny bit of hope that RBI would include startups engaged in cryptocurrency related business such as an exchange as part of this sandbox. Sadly it's clear that RBI is only thinking of blockchain without cryptocurrencies as part of it's framework.
RBI is welcoming blockchain technology under section 6.1.2 Innovative Technology -> Applications under block chain technologies but it has excluded cryptocurrencies.
6.3 Exclusion from Sandbox Testing
The entities may not be suitable for RS if the proposed financial service is similar to those that are already being offered in India unless the applicants can show that either a different technology is being gainfully applied or the same technology is being applied in a more efficient and effective manner.
An indicative negative list of products/services/technology which may not be accepted for testing is as follows:
- Credit registry
- Credit information
- Crypto currency/Crypto assets services
- Trading/investing/settling in crypto assets
- Initial Coin Offerings, etc.
- Chain marketing services
- Any product/services which have been banned by the regulators/Government of India
You can read the entire framework for regulatory sandbox here.
This makes one thing clear, the only way cryptocurrencies will be accepted is if by some chance the government of India legalises it in a policy.
Disappointing update but rather expected.
India story is looking at FinTech with blockchain but without cryptos. I'm not sure how this will play out in the future.
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