RBI, India’s central bank, has denied in its reply to an RTI query filed by an online news media, setting up of a research unit on new technologies including blockchain and cryptocurrencies.
RBI Negates Media Reports
An Indian online cryptocurrency media portal has revealed in an article published on 26th September that Reserve Bank of India (RBI), the country’s central bank has denied setting up of a separate research unit on cryptocurrencies, blockchain or artificial intelligence (AI).
About a month back, Economic Times, a leading financial media entity had reported the setting up of such a unit within RBI. The news report, apparently, had gone viral. The founder of the media portal Coin Crunch India had filed an RTI (Right to Information) query to find out the facts about this news report.
Surprisingly contrary to the reports the central bank in its reply to the RTI query said:
There is no new unit created formally in RBI for the purpose (Cryptocurrency, Blockchain and Artificial Intelligence) mentioned in RTI query. Therefore there is no information to furnish in the matter.
Disappointment for Indian Crypto-Community
Economic times in its article published on August 27th had reported the creation of such a unit by RBI. The report had claimed that two people familiar with the central bank’s plans said:
This new unit will research and possibly draft rules and supervise new emerging technologies in the future.
It had further added that as per one of the two referred people:
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.
The report had raised hopes within the country of some kind of movement in the direction of regulations.
RBI’s Stand on Cryptocurrencies
RBI has so far maintained a hard-line stance against cryptocurrencies. Earlier in April this year, the central bank had advised banks to sever business ties with all cryptocurrency exchanges through a circular. The regulator had given the banks a buffer of three months to act. The circular came into effect on July 5th, creating panic and anxiety within the Indian cryptocurrency community.
Trading volume on exchanges dropped by 90% after July and investors who could not exit the market were left in a lurch. The exchanges together have challenged the notification in the country’s Apex court, and judgment on the matter is expected soon.
As reported last week, Zebpay, one of the country’s oldest and biggest exchange decided to shut down losing patience and no longer able to sustain operations. Some firms in their attempt to survive have launched Peer to Peer platforms.
RBI is part of the committee set up by the central government earlier this year under Subhash Chandra Garg, the secretary of Department of Economic Affairs to create a template for cryptocurrency regulations. The committee which was expected to put forth their recommendations by July this year postponed the timeline asking more time for research on the subject.
The news of RBI setting up a research cell last month had brought some hope for the distraught crypto-community in India. Now with the clarification that no such entity has been set up, there seems to be no immediate respite to the woes of the Indian cryptocurrency investors. All eyes are now on the apex court’s verdict.
Do you think that India’s central bank should look at setting up regulations rather than outrightly ban the trading of cryptocurrencies?
Image courtesy of ShutterStock and Livemint