![Loading...](https://assets.techcircle.in/static-assets/images/spinner-1s-64px.gif)
RBI omits cryptocurrency from draft framework for fintech sandbox
![RBI omits cryptocurrency from draft framework for fintech sandbox](https://assets.techcircle.in/uploads/article-image/2019/04/images/18373-rbi.jpg)
The Reserve Bank of India (RBI) has left out cryptocurrency from its draft guidelines for a regulatory sandbox aimed at fostering innovation in the fintech segment.
![Loading...](https://assets.techcircle.in/static-assets/images/spinner-1s-64px.gif)
The regulatory sandbox, which allows fintech startups to test innovative products as part of a cohort for up to six months, makes no mention of trading or investing in crypto assets as well as initial coin offerings (ICOs) for crowd investing in a peer-to-peer blockchain.
The central bank had in April last year directed all banks to stop transactions with any companies dealing in cryptocurrencies. Challenges against that move are still pending in various courts.
The framework for the regulatory sandbox has been unveiled weeks after RBI governor Shaktikanta Das had announced that a fintech innovation hub would be set up for the purpose of experimentation.
![Loading...](https://assets.techcircle.in/static-assets/images/spinner-1s-64px.gif)
The sandbox is limited to companies defined as a ‘startup’ in the eyes of the government. Also, these firms should have a minimum net worth of Rs 50 lakh as per its last audited balance sheet and be no more than five years old.
Through a set of cohorts, the regulatory body intends to test innovative products in retail payments, digital Know Your Customer (KYC) procedures, and smart contracts, among others.
The draft highlights 10 key areas for development of innovative products and services and five areas for development of innovative technology which can be considered for the regulatory sandbox. Up to 12 companies will be part of a single cohort of the sandbox.
![Loading...](https://assets.techcircle.in/static-assets/images/spinner-1s-64px.gif)
"RBI sandbox serves as a mentoring tool to fintech firms who are currently disorientated due to regulatory uncertainty around their respective technologies/products/business models and reiterates the growing importance of the fintech landscape in India," said Anurag Jain, founding member of industry body Digital Lenders Association of India (DLAI) and co-founder of invoice discounting platform KredX.
He acknowledged, however, that concerns around sharing proprietary technology with the sandbox were understandable.
"Trust the regulators as there is more to win than lose in the whole game," Jain added.
![Loading...](https://assets.techcircle.in/static-assets/images/spinner-1s-64px.gif)
The draft is based on the recommendations of an inter-regulatory working group set up in 2016 with representatives from banks, rating agencies and industry bodies including RBI, SEBI (capital markets), IRDA (insurance), PFRDA (pension), NPCI (retail payments) and IDRBT (banking technology).
“The regulatory sandbox will allow commercial testing under limited regulations and ample customer exposure, which will give startups a whole new experience of testing products. This will also ensure shorter pilot duration and the smooth launch of newer products,” Sampad Swain, chief executive officer of payment gateway provider Instamojo, told TechCircle.
The central bank has invited comments on the draft guidelines until May 8.
“We welcome the regulatory sandbox draft and it clearly shows that the regulator is keen on hearing from the smaller companies,” said Bhasker Kode, chief executive of fintech startup Bon.pe. “However, we would like some clarity on how the companies which are a part of the regulatory sandbox are expected to collaborate with NBFCs, banks and corporates and whether this will be facilitated by RBI.”
![Loading...](https://assets.techcircle.in/static-assets/images/spinner-1s-64px.gif)
Founded in 2016, Bon is backed by Omidyar Network and lends to self-employed individuals.