Crypto Industry Urges RBI to Expand Regulatory Sandbox for Innovation

As part of its regulatory sandbox, lobbying groups are petitioning the Reserve Bank of India (RBI) to allow the testing of crypto-related products. The proposed RBI framework, which currently excludes cryptocurrencies, exchanges, and initial coin offerings, will include blockchain technology testing for a limited number of consumers.

RBI Urged to Include Crypto in Regulatory Sandbox for Innovation

Mumbai, India - Industry groups are pressing the Reserve Bank of India (RBI) to broaden its proposed regulatory sandbox to allow testing of crypto-related products. The RBI's initial framework, unveiled in April, excludes cryptocurrencies, exchanges, and initial coin offerings (ICOs) from the sandbox, which aims to foster innovation in blockchain technology.

Nasscom's Request for Inclusion

The National Association of Software and Services Companies (Nasscom), India's leading IT industry association, has urged the RBI to reconsider its stance. Nasscom argues that cryptocurrencies are an integral part of blockchain technology, and their exclusion hinders the sandbox's effectiveness.

"Smart contracts and other approved blockchain technology cannot be tested under the sandbox without cryptocoins and tokens," Nasscom stated.

Payments Council Warns of Innovation Hinderance

The Payments Council of India has also cautioned that the sandbox's limited scope could stifle innovation in the country. The council believes that excluding crypto from the sandbox will make it challenging to develop cutting-edge products.

International Comparisons

Regulatory sandboxes are becoming increasingly popular worldwide, with the United Kingdom's Financial Conduct Authority (FCA) being a notable example. India's strict approach to crypto testing has raised concerns among startups, who fear that innovative products will not be able to be incubated within their home country, even if they are approved in international markets.

India's Uncertain Crypto Landscape

India's relationship with cryptocurrencies has been tumultuous. In April, reports emerged that the government was considering a complete ban on digital currencies. Earlier this month, the Indian crypto exchange Coinome announced the suspension of its operations due to regulatory challenges.

Call for a Balanced Approach

Industry experts believe that the RBI should strike a balance between protecting investors and fostering innovation. By including crypto-related products in the regulatory sandbox, the RBI can gain valuable insights into the risks and benefits of these technologies while promoting the development of a robust and responsible crypto ecosystem in India.