The Reserve Bank of India (RBI), the nation’s central bank, has formed a new research group focusing on emerging technologies like cryptocurrency, blockchain and artificial intelligence, the Economic Times reports. The RBI has been the driving force in India’s recent crackdown on cryptocurrency trading. However, recent developments bring promise that regulatory reform could be underway. As part of the program, the RBI will attempt to draft rules to supervise these emerging technologies.
Last month Indian legislatures instituted new regulations banning banks, financial institutions and other regulated entities from participating in crypto-related transactions. The ban was led by India’s central bank, which contended that uncertainties in the cryptocurrency market presented serious risks for Indian investors.
G.V. Anand Bhushan, a partner at Shardul Amarchand Mangaldas & Co., recently told Bloomberg, “Nobody is able to price the risk currently. The minute you have clarity on exchanges and whether digital currencies can be used as a medium of exchange or payment, or if it is a commodity, there will be less speculation and much more stability in pricing.”
The RBI now seems to be reconsidering its strict opposition to the developing cryptocurrency market. While much of the Indian cryptocurrency industry is now suspected to have been driven into black markets, the RBI appears to be attempting to bolster its intellectual understanding of crypto in an effort to provide safer and more efficient regulation.
“As a regulator, the RBI also has to explore new emerging areas to check what can be adopted and what cannot. A central bank has to be on top to create regulations. This new unit is on an experimental basis and will evolve as time passes,” one anonymous source from the RBI told the Economic Times.
The new research team is reported to be about a month old. It is rumored that a chief general manager for the project has already been selected, although a formal announcement has yet to be made. The project will involve the creation of science laboratories with professionals from computer science, data analytics, statistics, economics, econometric and finance backgrounds. In addition to gaining a better understanding of the aforementioned technologies, the RBI aims to tackle issues surrounding inflation, banking regulations and policy enforcement.
“Unless regulators are part of the ecosystem, they understand and have a clear indication of what is accepted and what is not, it can neither protect the industry it regulates nor the consumers who use it,” said Piyush Singh, managing director of financial services at Asia Pacific and Africa at Accenture. “This is true specially in the financial world where paper-based regulations are a passe’ due to the onset of digital technologies. It is extremely important and the right thing to do from RBI’s perspective.”
The Economic Times reports that the new research unit is set to officially launch in December, 2018.
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