Central Bank of India reportedly formed a new internal unit committed to researching and regulating evolving technologies through draft rules, particularly in the blockchain, artificial intelligence (AI) and cryptocurrency, the Economic Times reported on Monday.
In early 2018, the reserve bank of India (RBI) issued a mandate to all commercial institutions including banks to ban them from regulating or providing services to firms linked with cryptocurrencies. The effect of the circular adversely impacted local cryptocurrency trading and witnessed crypto traders opposing the ban.
Last month at the hearing in Supreme Court, after years of caution against exchanging cryptocurrencies, the central bank said it was essential to regulate the sector.
The internal unit had been working for a month and already has an anonymous general manager guiding it, as per the report citing two sources are aware of progress at the RBI.
“As a regulator, the central bank also has to research on new emerging sectors to check what can be embraced and what cannot. A central bank has to be on top to create regulations. This new internal unit is on an experimental basis and will develop as time passes.” One of the sources reported.
In an essential endorsement of the underlying decentralised technology driving cryptocurrencies, the internal unit of the RBI contended that blockchain technology had “matured enough” to empower the digitisation of the country’s fiat currency, the rupee, into digital currency. A white paper supporting those notable claims was issued in January last year.
The Central bank executive director, Shri S. Ganesh Kumar in 2017, declared the research towards a ‘fiat cryptocurrency’ and labelled the token as ‘Lakshmi coin’ after the Hindu goddess of prosperity and wealth.
The RBI is also creating a blockchain platform of its own to enable and back many financial institutions including banking in the country. The central bank has already determined different sectors in business, banking and registry services all set for blockchain implementation.