The National Association of Software and Services Companies (NASSCOM) is a trade association of Indian Information Technology (IT) and Business Process Outsourcing (BPO) industry. Established in 1988, NASSCOM is a non-profit organisation.
Technology industry lobby groups and founders of startups have asked India’s banking regulator to include cryptocurrency and crypto assets in its proposed regulatory sandbox framework for the fintech industry. Nasscom pushed the Reserve Bank of India to consider crypto, crypto-related assets in its regulatory sandbox.
In April 2019, the Reserve Bank of India, had announced that it was working on ‘Draft Enabling Framework for Regulatory Sandbox’. This draft had excluded Cryptocurrency, Initial Coin Offering, credit registry, and other crypto-related assets/sectors. The regulator had invited comments from stakeholders on the guidelines by May 8.
There had been rumors of the Government of India, banning cryptocurrency on a whole.
Various technology industry lobby groups and Fintech startups have asked the RBI to earnestly consider/include cryptocurrency and other related crypto-assets in the regulatory sandbox framework. The Government had been supporting the distributed ledger technology, on which cryptocurrency and blockchain are actually based on.
“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,” said IT industry trade body Nasscom. It further added: “The decision to keep crypto-currencies, trading of crypto-currencies and initial coin offerings out of the purview of the regulatory sandbox, is still not clear.” Nasscom argued the regulators in the UK support such innovative steps in their sandbox and addition of crypto will enable RBI to gauge the risk involved with crypto.
Along with Nasscom, The Payment Council of India [PCI] also suggested a more open structure and noted that since there was no complete ban of crypto in the country yet, it should be a part of the sandbox.
The ex-chairman of PCI, Naveen Surya said: “The boundaries can’t be defined right away. The discussion has been on how an open framework can be created instead of a subset of existing laws, because then we wouldn’t be achieving the innovation objective. Ideally, they shouldn’t have such large exclusions.”
Fortunately, founders who have been part of regulatory sandboxes in other countries, too, have weighed in on the debate.
Incrypt Blockchain said it had submitted a report to the regulator on a blockchain-specific sandbox, which included specifics on policies and procedures. “Our research suggested that by restricting access to certain qualified digital asset startups, India could allow experimentation without worrying about any significant risks,” said Nitin Sharma, founder of Incrypt Blockchain.
Prashant Garg, Partner, Data and Analytics at EY India, added, “Blockchain has the potential to solve issues involving governance, security and traceability, with applications such as smart contracts and multi-party financial transactions enabling digital identity. These have immense applications, especially for solving issues at a scale for a country like India. The exclusion is aimed at just one application of blockchain (cryptocurrency); clearly the regulator sees fiat money being the way forward for India.”
These developments occur in the confusing crypto realm of India. It remains to be seen if this nudge will bring about a positive change.
