India's central bank is setting up a fintech sandbox that may include blockchain startups and tools – but notably, explicitly excludes any cryptocurrency-related projects.
The Reserve Bank of India (RBI) published its draft framework for a regulatory sandbox on Thursday, a move that comes nearly three years after it first formed a working group to look into fintech solutions.
"The 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," the draft says.
Operating a sandbox helps regulators such as the RBI to better understand new technologies, while still spurring innovation, according to the document.
"Applications under block chain technologies" is listed as a form of "innovative technology" that may fall within the sandbox's parameters, the draft says, as do applications related to smart contracts.
However, the sandbox will not entertain any crypto-related projects. These include cryptocurrency or crypto asset services; crypto trading, investing or settling; or initial coin offerings, as well as a few more traditional financial services, according to the document.
(Any products or services which are already banned in India will likewise not be eligible for participation in the sandbox).
The central bank is looking for projects which retail payments, money transfer services, digital identity, mobile payments and financial inclusion, according to the document.
Local startups have filed petitions pushing back against the ban, and the Supreme Court of India is currently reviewing the matter. It is unclear when a final decision may be published.
However, RBI is seemingly more open to blockchain tools, and reportedly launched a unit dedicated to researching regulatory frameworks for blockchain last August.
Indian flag image via Shutterstock
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.