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RBI's Fintech Regulatory Sandbox Allows Blockchain, Excludes Crypto Startups

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The Reserve Bank of India or RBI released a draft framework for fintech regulatory sandbox which includes blockchain technology, but not cryptocurrency startups.

As per the RBI site, a regulatory sandbox allows the regulator, the innovators, the financial service providers and the customers to conduct field tests to collect evidence on the benefits and risks of new financial innovations.

The new draft "Enabling Framework for Regulatory Sandbox" includes a list of innovative products, services and technology which could be considered for testing. Apart from applications under blockchain technologies, the approved technologies also include artificial Intelligence and Machine Learning applications, mobile technology applications, Data Analytics, and application program interface or APIs services.

However, the sandbox excludes crypto currency and crypto assets services, Trading, investing, settling in crypto assets as well as Initial Coin Offerings or ICOs from testing. Credit registry, Credit information and chain marketing services are other exclusions.

RBI said the testing process will begin with 10-12 selected entities through a comprehensive selection process.

The agency invited comments on the draft guidelines from stakeholders by May 08 with subject line as "Feedback on the Draft Enabling Framework for Regulatory Sandbox."

It was in 2016 that RBI set up an inter-regulatory Working Group to develop protocols to regulate fintech companies.

In July last year, RBI had imposed a ban on the country's commercial banks from dealing with cryptocurrencies such as Bitcoin. Many Indian cryptocurrency exchanges faced the ban-related difficulties by either introducing a peer-to-peer facility, shifting base from India, or closing down operations.

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