The RBI’s proposed framework, unveiled last month, would allow blockchain technology to be tested on a small number of consumers — but cryptocurrencies, exchanges and initial coin offerings are excluded.
Nasscom, a trade association of Indian IT companies, is calling for the regulator to rethink, and argues the RBI would better understand the risks associated with crypto by including it in the sandbox. The organization said:
“Since cryptocoins and tokens are an important component of the blockchain technology, the draft regulations appear to exclude testing of smart contracts and other approved blockchain technology under the sandbox.”
Meanwhile, the Payments Council of India has warned innovation will be difficult to achieve if the sandbox’s framework has such large exclusions.
Sandboxes are used by regulators around the world, including the United Kingdom’s Financial Conduct Authority. Some startups are concerned that India’s hardline approach will mean innovative products cannot be tested in their home country, even if they are permitted in international markets.
India’s relationship with crypto has been fraught at times. Late last month, a report suggested that the world’s second-most populous nation was considering a complete ban on digital currencies.
On May 10, Indian crypto exchange Coinome announced it was halting operations because of regulatory difficulties.