In its newly released draft of a planned regulatory sandbox (RS), The Reserve Bank of India (RBI) aims to support blockchain companies but not crypto start-ups, reports Coin Desk. The RS draft was finally released three years after India’s central bank assembled a team to work on formulating financial technology solutions back in 2016.
The draft defines an RS as a ‘live testing’ given to qualified products and services in a ‘controlled/test regulatory environment.’ Companies included in this test environment will experience regulatory relaxations solely to testing the feasibility of implementing these changes. The regulator, which is RBI, in this case, will decide to generally apply these changes based on the result of the live tests.
According to the draft, the sandbox will launch a financial service that will work with fintech start-ups, as well as current and newly developed innovations. This aims to benefit customers, as well as address any issues regarding finances. With a sandbox, the RBI will have a more in-depth understanding of emerging inventions within the RS’ coverage. This also seeks to facilitate the development of new technologies.
Many would think that crypto companies will qualify for the RS, but one caveat of this proposed sandbox is that related projects are not within the stipulations of the draft. This means that crypto-related companies’ applications for the sandbox will be rejected. This includes cryptocurrencies, trading, investing, asset management, and other pertinent products and services.
This comes as no surprise as the RBI has been exhibiting dislike towards cryptocurrency endeavors and has prohibiting Indian banks from working with crypto companies. In fact, it has issued frequent warnings against crypto-related services and products in 2018.
Other products and services that are banned in the country are also not covered by the RS.