Regulatory Sandboxes For Cryptoassets, Cryptocurrencies And Blockchain Are Needed In India

Cryptoassets and cryptocurrencies use blockchain infrastructure that is robust, secure, resilient and can accommodate many more assets, projects and initiatives. For instance, blockchain can be used to create disruption in educational sector of India by launching unique and futuristic online projects. But in order to grow, sufficient and qualitative research and development must be undertaken in India in the fields of blockchain, cryptoassets, cryptocurrencies, etc. This must be supported by launching regulatory sandboxes where crypto stakeholders can develop their products and services.

There are two main regulatory stakeholders who may be involved in the field of regulatory sandboxes for cryptoassets and cryptocurrencies. These are Govt of India (GOI) and Reserve Bank of India (RBI). Fortunately, both of them favour the regulatory sandboxes approach, especially in the FinTech field and both would support research and development in the field of blockchain. Unfortunately, both of them are against private cryptocurrencies though GOI is not as strict as RBI is in this regard. So it is not clear whether GOI would promote and support regulatory sandboxes for cryptoassets and cryptocurrencies in India.

As far as RBI is concerned, it is totally non tolerant towards cryptocurrencies and it banned the same through a circular in the past. The circular was set aside by the Supreme Court of India in March 2020 due to lack of a law in this regard. Now Indian Govt is planning to formulate a law on cryptocurrencies that would decide the fate of private cryptocurrencies in India.There seems to be some disagreement between the Govt and RBI regarding treatment of private cryptocurrencies. RBI has maintained its strict approach towards private cryptocurrency while Govt may left a window of survival for them. But nothing can be conclusively said about it till the public draft of law is out for consultations.

As far as cryptoassets and cryptocurrencies regulatory sandboxes are concerned, RBI has once again showed its dislike for private cryptocurrencies and cryptoassets in its Enabling Framework for Regulatory Sandbox document (Pdf), dated 16-12-2020. RBI has gone far beyond cryptoassets and cryptocurrencies and it has released an indicative negative list of products/services/technology which may not be accepted for testing for regulatory sandboxes purposes. As per the negative list, cryptocurrency/cryptoassets services, trading/investing/settling in cryptoassets, Initial Coin Offerings (ICO), etc would not be allowed for regulatory sandboxes purposes. As a result the small window that crypto stakeholders were expecting from RBI would not available and their only hope is the window that may be provided or may not be provided by (GOI) in the proposed law.

This CoE is supported by DPIIT recognised startups of Perry4Law Organisation (P4LO) and its techno legal incubators like CECSRDI and TLCEODRI. So we can safely assume that we have a voice and concern that would be suitably accommodated by GOI and RBI while implementing the final policy and law for cryptoassets and cryptocurrencies in India. We offer our two decades of techno legal experience and expertise to streamline cryptoassets and cryptocurrencies regulation and management in India. Stakeholders who are part of any existing regulatory sandbox can also approach us to meet all legal requirements pertaining to that particular sandbox and we would love to help them.