A new internal unit has been established by the reserve bank of India according to reports. This unit will be tasked with conducting research and regulating emergent technologies. The unit will specifically focus on cryptocurrencies, artificial intelligence (AI) and blockchain technology. The Reserve bank of India (RBI) is yet to issue a formal announcement on these developments. This reserve bank has however moved with discretion to set up this research unit and will as reported by the economic times, possibly also supervise a new research unit using various draft rules in the near future. According to reports, this unit of researchers has reportedly been operational for a month now and is headed by a general manager that is yet to be named.
A source revealed that the RBI as a regulator has to look into emerging technologies, to see what can be adopted and what cannot. The source further stated that it was imperative for a central bank to be on top of such issues in order to create regulations. It was also revealed that the new research unit was put in place on an experimental basis and the whole outfit would evolve with time. These developments succeed a period of uncertainty and negativity towards crypto by big financial institutions. The RBI had warned against the trading of cryptocurrencies like Bitcoin until it decided to move into crypto regulation after a Supreme Court decision in July.
In April of this year, The RBI had issued a circular cautioning financial institution against transacting with outfits that were associated with cryptocurrencies in any way. The warning put a huge shackle on the feet of any crypto related operations in the country and let to crypto exchanges challenging the RBI in court. Senior Indian government officials not allied to the RBI or any exchange have moved to rule out a complete crypto ban in the country, citing that the tokens were likely to be classified as commodities in the near future.
In a significant and unexpected endorsement of crypto, the research arm of the RBI has described crypto as “mature enough” to facilitate the digitization of the country’s fiat currency, Rupee, into a digital currency. This was noted by a white paper published in January last year. Research towards a fiat currency was confirmed late last year by a senior RBI official. There was also talk of naming the fiat currency Lakshmi coin, after the Hindu goddess of wealth and prosperity. The RBI is also said to be developing a blockchain platform of its own to enable and support several commercial banking applications.
