Deep digging in India's blockchain policy: behind the lifting of the cryptocurrency ban and the announcement of the blockchain national policy

On March 4, the Supreme Court of India finally ruled on the bank ban of the Reserve Bank of India. The verdict supported the appeal of cryptocurrency exchanges and project parties, and ruled that the Reserve Bank of India (RBI) banned financial institutions from issuing cryptocurrencies in April 2018. It is unconstitutional for companies to provide banking services.
It is reported that the Indian crypto community submitted a petition to the Supreme Court immediately after receiving the RBI ban in 2018. However, after the Indian Supreme Court heard several rounds of hearings, it only made a clear ruling this time. However, during the trial period of nearly two years, many exchanges were forced to close due to the continuous decline in trading volume.
In April 2018, the Reserve Bank of India stated that it will no longer provide services to individuals or businesses engaged in cryptocurrencies. Five months later, as one of India's largest crypto exchanges, Zebpay announced the suspension of all transactions due to conditions being "extremely difficult."
Commenting on the Supreme Court's decision, CoinDCX founder and CEO Sumit Gupta said: "The lifting of the ban by the Supreme Court will bring new opportunities for investment, the economy and the entire market in India. "" As one of the few survivors in this case, we thank the Supreme Court for hearing our claim. We have always believed that cryptocurrency has the potential to help India realize the dream of a $ 5 trillion economy. "
Policy 4.0 CEO and founder Tanvi Ratna, who works on crypto policy development in India, wrote in a pre-judgment analysis on Tuesday that a victory in this judgment would mean "recovery of Indian blockchain ecosystem liquidity and exchanges and other Resumption of blockchain project activities. "
However, she believes that based on the results of this ruling, it is too early to believe that the Indian crypto community has won. She reasoned that the judgment on the Reserve Bank of India "will not directly affect actions at the policy level", the judgment may still be a "short respite" for the industry.
And if the ruling is based on the belief that the ban by the central bank is unreasonable, it means that the financial policy makers of the Indian government may also rethink the policies on the crypto industry. The future direction of crypto policies is still unknown.

India's central bank supports blockchain innovation

Despite 2018, the RBI issued a ban on the crypto industry. But it is worth noting that in 2019, the Bank of India began to implement a financial sandbox policy to support blockchain innovation testing.

On April 18, 2019, the Reserve Bank of India (RBI) released a report announcing its regulatory sandbox provisions. This includes testing various blockchain applications, but excluding cryptocurrency related projects.

Previously, many countries in the world, including Singapore and the United Kingdom, introduced financial sandbox policies to help Fintech companies launch innovation tests involving a small number of consumers over a period of time.

In 2016, the Bank of India began reviewing the sandbox framework to better respond to “fast-growing” financial technology market dynamics. After three years of evaluation, the RBI believes that the public can try "innovative technologies" based on blockchain, and through the sandbox policy, the RBI has the opportunity to assess whether new regulations are needed to protect consumers.

The Bank of India believes that blockchain companies and consumers will also benefit from this policy. Because blockchain companies "do not need expensive promotional expenses when testing the feasibility of products," and the public "reduced costs and improved access to financial services."

At the time, the RBI also made clear that "innovators may lose some flexibility and spend more time because of the sandbox process." And, completing these tests does not mean that no further regulatory approval is required.

The Reserve Bank of India has detailed the list of "innovative technologies" that apply for sandbox testing, including blockchain platforms, mobile payment and digital identity software, data analysis, artificial intelligence or machine learning applications. In addition, industries eligible for "innovative products and services" include retail payments, remittance services, digital know-your-customer checks, smart contracts, and cybersecurity products.

But at the same time, cryptocurrencies, crypto exchanges, and ICOs are no longer in the sandbox. In addition, products and services that have been banned by the Indian government or regulators are not eligible .

Previously, the Reserve Bank of India has also been planning to launch its own digital currency, but the plan to issue it has been repeatedly delayed.

India releases draft national blockchain policy

As early as February of this year, India's blockchain policy was again favorable.

Graph source network

On February 3, according to the cointelegraph news, the Indian government policy think tank NITI Aayog released a draft of the national blockchain policy entitled "Blockchain-Indian Strategy", which elaborates the different use cases of the Indian blockchain and addresses ongoing The summary of the pilot project aims to develop specific national action plans for blockchain technology.

The above documents are released in two parts. The first part involves basic concepts, smart contracts, the economic potential of the blockchain, and use cases. The second part mainly covers specific recommendations for using blockchain technology in India.

NITI Aayog explained that the basic characteristics of blockchain technology or the paradigm shift that represents India's political economy, and emphasized the need to reconsider the current participation of government agencies. "Governments should pay special attention to decentralized networks where peer-to-peer transactions can create more social value. If state entities only maintain ledger accounts rather than increase value, then we can re-examine the role of government."

Currently, NITI Aayog has carried out a proof of concept in four areas in an attempt to better understand the obstacles that may be encountered in implementing blockchain technology. According to reports, the pilot projects include drug tracking, verification and approval of claims for fertilizer subsidies, verification of university certificates, and transfer of land records. In addition, NITI Aayog pointed out that in order to deploy blockchain on a large scale, the private and public sectors need to modify some laws and regulations.

On the whole, after a period of severe ban on Indian blockchain and crypto policies, there has been a gradual trend towards openness and acceptance. Earlier, the ban of the Indian central bank became the biggest obstacle to Indian crypto industry access. The ban was therefore invalidated, which is undoubtedly very exciting news for the Indian crypto community. For global cryptocurrency investors, India may become the next hot spot for investment, because India's move will definitely promote the prosperity of the crypto industry and further release the market potential of a billion people.