One month after the Supreme Court of India reportedly instructed the government to release regulations for the cryptocurrency industry, nothing has happened, and the industry has suffered yet another discrimination.
On Thursday, the Reserve Bank of India announced that it was going to launch a regulatory sandbox for fintech startups and released proposed rules for participating projects. Such a sandbox allows the RBI to understand new technologies and how they could help improve financial transactions.
Precisely, the document mentions that any “proposed financial service to be launched under the RS should include new or emerging technology, or use of existing technology in an innovative way and should address a problem, or bring benefits to consumers.”
While you would mainly expect cryptocurrency startups to fit into that category of fintech startups easily, the RBI explicitly stated that it would not allow firm who are offering Cryptocurrency services.
To further show that the discrimination was not unintentional, the proposal also mentioned that the sandbox would exclude firms dealing with:
trading, investing or settling in crypto assets
Initial Coin Offerings, and
any product/services which have been banned by the regulators/Government of India; a category that cryptocurrencies fall into.
The document mentions that the RBI would include fintech firms building products around money transfer services, digital identity, financial inclusion, mobile payments, and the likes. Only anything project related to cryptocurrency is not accepted.
The RBI’s latest attempt to play down on the potential of cryptocurrencies is not the first time that the regulators have taken such as a stand. It is well documented that the RBI banned local banks from doing business with crypto exchanges, forcing most of the firms to close shops.
Banks are also requiring customers to confirm in their terms and conditions details that they would not have anything to do with cryptocurrencies or risk losing their funds.
At this point, India’s cryptocurrency ecosystem may be facing oppression that only clear regulations can solve. But those regulations are not in sight, meaning that the rumble continues while young the industry continues to suffer.