Indian Central Bank Quietly Launches New Crypto Unit

The Reserve Bank of India (RBI) is building up its tech knowledge by starting a new unit that will oversee all new emerging technologies including the blockchain, artificial intelligence and cryptocurrencies.

Given the fact that India took a massive stance against the crypto currency industry and issued a blanket ban, it is interesting to see how quick the RBI has launched a new crypto research unit without much publicity.

Reports also suggest that the RBI has plans of its own on launching its own cryptocurrency.

The main job of the new unit would be to take a look at all of the emerging technologies that can potentially disrupt the market. As India's financial regulator, the RBI needs to know the possible effects such as cryptocurrencies and the impact they could have on India’s economy. The unit will study the feasibility of potential technologies and give proposals on what the RBI can do to ensure that any disruptions to the market are minimal. The RBI has held back on a formal announcement of the unit, though it has been in operation for a month now.

The addition of this unit is thought of as a good move since it would allow the RBI to better respond to emerging technologies unlike how it has handled the cryptocurrency movement in India. With this unit, the RBI would be able to set up a better response to any emerging technology.

In a statement, Piyush Singh, financial services managing director for the Asia Pacific and Africa at Accenture, said

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. 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

Adapting to Tech

The RBI's handling of cryptocurrencies is an example of what wrong moves in the market can do. Earlier in the year, the bank issued a circular that forbade all financial institutions from dealing with any business involved with cryptocurrencies. This had a crippling effect on the domestic cryptocurrency market. Cryptocurrency businesses are currently challenging this circular in the Supreme Court.

Fortunately, the RBI seems to have learned something from this debacle. It has recently moved towards researching blockchain technologies. The bank has confirmed that is looking at developing its own cryptocurrency, while also developing a blockchain platform that will help streamline domestic banking processes.