Comments to the Reserve Bank of India on Blockchain, Crypto

WASHINGTON - April 20, 2019 - PRLog -- The Central Bank of India, the Reserve Bank (RBI) announced the terms of its financial technology 'sandbox" structure. Under the policy, fintech companies can put financial service innovations to the test with a small number of consumers over a set time period.

Regulatory sandboxes have been used in the US, the UK, and many other countries. RBI issued its report on April 18. As noted, under the  terms of the RBI sandbox, "various applications of blockchain technology can be tested, while cryptocurrency-related projects are clearly excluded."

Creative Investment Research sent a letter to the Bank with comments on the sandbox policy. Our letter, shown below, states:

"As we noted on Oct. 5, 2006, predicting the rise of cryptocurrencies: 'competitive advantage with respect to capital access is available to any country with significant economic potential and a modest telecommunications infrastructure.'

In this light, we encouraged RBI to revisit the exclusion of cryptocurrency from Sandbox Testing. Our letter notes that "there is no country with more significant economic potential than India."

See our 2006 comments to the SEC predicting the rise of cryptocurrency at https://www.sec.gov/comments/4-526/4526-1.pdf

India's successful industrial policy led to the development of a highly effective digital processing and telecommunications infrastructure. This means India is well positioned to safely develop and deploy new cryptoassets. This allows the country to control it's monetary destiny in a way that others cannot. Further, by abandoning the cryptocurrency field, India allows others to take a leading role. This will have negative consequences not only for India, but for dozens of other countries who might otherwise be able to accomplish certain social development goals using the tools and techniques India's programmers are sure to create.

We are also concerned with the negative influence India's absence will have in this field. Other, less well meaning entities may come to dominate."

We encouraged RBI to revisit this policy. We understand that other institutions in the country may have more control over this policy.