The announcement made by Reserve Bank of India (RBI), India’s Central Bank, to exclude cryptocurrency out of its regulatory sandbox has evoked sharp responses from many industry stakeholders including the leading IT firms and financial technology organizations. Stakeholders working in the domain of Technology, finance and other related Industries where the application of cryptocurrency and blockchain technology assumes a great significance are now lobbying in order to persuade RBI to change its stance. Just so you know, the Indian Government and RBI have adopted a negative outlook towards crypto and blockchain which is impeding the growth prospects of digital coins in India. RBI has already barred the banks and financial Institutions from dealing with crypto businesses, a decision which has taken its toll on many crypto exchanges in the country. In fact, many exchanges operating within the country have already shut their shop while others are struggling to stay afloat.
Regulatory Sandbox Draft
RBI last month announced a draft for regulatory sandbox in which the bank is going to discuss the need for regulations related to many new technologies that have emerged around the globe. It was expected that cryptocurrency and blockchain would also become part of this deliberation, but unfortunately, the list of assets about whom the deliberation will be held doesn’t include cryptocurrency. The reason behind this exclusion is the government’s viewpoint that cryptocurrencies have nothing new to offer to the economy, and they might even harm the economic status of the country.
Lobbying against Decision
The decision to exclude cryptocurrency has not gone down well with many organizations. Take for example NASSCOM, an industry body representing IT companies in the country, is trying to persuade the RBI to change its decision. The association stresses on the fact that it is important to have a comprehensive understanding of the potential risks and benefits associated with any kind of asset including cryptocurrency but without deliberations, it won’t be possible to have a close acquaintance with digital coins. The proper way to address the issue is to gain more knowledge about it rather than censoring it outrightly. The exclusion of cryptocurrency also means that we are going to lose on important merits belonging to blockchain technology including the popular smart contracts that are increasingly witnessing high usage across industries.
In addition to IT association, Payments Council of India (PCI) is also making a strong case for the inclusion of cryptocurrency in the draught regulations. Commenting on the decision of the government, emeritus chairman of the group, Naveen Surya said that government position in this regard doesn’t exude confidence and could possibly end up hampering the process of developing a new market or modernizing the old one. The council is of a viewpoint that such kind of large exclusions shouldn’t be made and they must be discussed in details before any decision of such intensity is made. Local cryptocurrency exchanges have also joined the chorus of demanding the RBI to have a rethink on its decision. These exchanges argue that owing to decentralized technology of digital coins, no government has means to monitor this and therefore, it will be wrong to ban crypto assets in the country citing safety and security reasons.