The Reserve Bank of India has set up a dedicated wing for R&D in the field of cryptocurrency, blockchain, and artificial intelligence. According to sources, the latest move is in accordance with the growing significance of blockchain in India, and is expected to bring a positive change in the opinion of RBI on blockchain.
Moreover, the move can also be associated to lawyer Shyam Divan’s representation of RBI’s opinion on cryptocurrencies stating that the need for regulation of blockchain-based tokens is a real thing and cannot be ignored.
Reportedly, the new unit will study the technical aspects of blockchain, cryptographic tokens and artificial intelligence to devise ways to integrate them with existing financial solutions. Other than this, RBI also assembled a data science lab to collect insights regarding the utility of computer science, data analytics, statistics, econometrics, economics, and finance to tackle soaring financial concerns like inflation control, regulation, and policy enforcement. The data science lab is said to be functional by December 2018.
A worrisome word from the apex institution, RBI made an official announcement in April 2018 restricting banks to maintain relationship with individuals and institutions dealing with cryptocurrencies in the country by 5 July 2018, followed by a court hearing on 20 July 2018, after which there has been an outcry among the crypto trading exchanges for regulation of the same, instead of imposing an outright ban. As a result, although the hearing for the case was postponed till 11 September 2018, the crypto market had already taken a nosedive by the end of June. Not to mention, the communiqué also influenced the spirit of blockchain in India, especially in terms of software development, as according to a study by Incrypt, more than 80% blockchain developers will be forced to move abroad to work with foreign blockchain companies if India does not adopt a regulatory framework for cryptocurrencies in the near future.
Following the chaos, this is the first time, (though not official yet) RBI has taken a step towards understanding the underlying utility of blockchain technology, which will hopefully lead to a change in the stringent take of RBI on blockchain and cryptocurrencies, and facilitate regulated application of cryptocurrencies in mainstream financial systems.