The financial industry is no stranger to complying with regulatory requirements via technology. RegTech, or managing regulatory processes via innovative digital solutions using artificial intelligence, biometrics, machine learning, and big data, can help in compliance, monitoring, and regulatory reporting efficiently.
However, it is not just about innovation that undergirds the rise of RegTech, there is also a massive cost attached to it that reflects in the cost of doing business. India has a long way to go to acclimate to this digitization and disruptions such as the emergence of cryptocurrencies.
So, how will India unleash the potential of blockchain and its cross-sector applications? Will features like trade finance be able to adhere to monitoring obligations, even if India were to quickly adapt to the RegTech revolution? And, how will it cope with de-bureaucratization and automation?
In the first dispatch of Mint’s Demystifying Regulation in Technology, experts deliberated on cryptocurrency regulation.
Sanjay Khan Nagra, partner, Khaitan and Co, said a key dilemma of innovation is not knowing if an idea would impact the world. However, for cryptocurrencies, the regulatory concerns are real, and it is time to address these concerns. Besides, considering that it is an evolving technology changing almost on a daily basis is it possible to track the innovations and address them with relevant changes in regulatory norms?
The governments can classify crypto the way they classified wallets, defining it as a new category as it creates different sets of problems, Nagra said. Considering that India is a semi-open economy with no robust capital flight, the regulatory framework for cryptocurrenicy must be formulated with the help of a cross-section of experts, he added.
Sudipta Bhattacharjee, partner, Khaitan and Co, said there are concerns over technology outpacing laws and regulation, and thee regulatory vacuums can hurt live technologies. He said a regulatory sandbox is key because if useful disruptive technology is banned, then it would just be driven underground but it would not disappear. He said the success of Unified Payments Interface, or UPI, and other digital payment platforms shows that India was ready for cryptocurrencies. It cannot be considered in binaries, wherein the government introduces its own digital currency, but bans the rest, as this is a dangerous approach, he said. The government is aware of the hundreds of use cases of blockchain wants to leverage the technology to ensure targeted delivery of benefits and subsidies, he said. The crypto bill must have a broad-based approach, and consider issues associated with currencies like Bitcoin, he said. India’s renewable energy policies must also be integrated and policymaking has to intervene if cryptos take an ecological toll.
