RegTech can help improve compliance

However, it is not just innovation that is the basis of the rise of regtech, there is also a huge cost associated with it that reflects the cost of doing business. India has a long way to go to adapt to disruptions like this digitization and the emergence of cryptocurrencies.

So, how will India unleash the potential of blockchain and its cross-sector applications? Will facilities like trade finance be able to comply with monitoring obligations even as India has to adapt quickly to the regtech revolution? And, how will it deal with non-bureaucracy and automation?

In the first dispatch of Mint’s Demystifying Regulation in Technology, experts deliberated on cryptocurrency regulation.

Sanjay Khan Nagra, partner, Khaitan & Co, said one of the key dilemmas of innovation is not knowing whether an idea will impact the world. However, regulatory concerns are real for cryptocurrencies, and the time has come to address these concerns. Also, given that it is an evolving technology that is changing almost on a daily basis, is it possible to track innovations and address them with relevant changes in regulatory norms?

Governments can classify crypto the way they have classified wallets, defining it as a new category because it creates a variety of problems, Nagra said. Given that India is a semi-open economy with no strong capital flight, the regulatory framework for cryptocurrencies should be worked out with the help of a cross-section of experts, he said.

Sudipta Bhattacharjee, partner at Khaitan & Co., said there are concerns about the technology of law and regulation, and you regulatory vacancies could harm live technologies. He said a regulatory sandbox is important because if useful disruptive technology is banned, it will only be driven underground but it will not disappear. He said that the success of Unified Payments Interface or UPI and other digital payment platforms shows that India is ready for cryptocurrency. This cannot be considered in binaries, in which the government introduces its own digital currency, but bans the rest, as it is a dangerous approach, he said. The government is aware of hundreds of use cases for blockchain, which seeks to leverage the technology to ensure targeted distribution of benefits and subsidies, he said. The crypto bill should have a broad-based approach, and consider issues involving currencies like bitcoin, he said. India’s renewable energy policies also need to be integrated and policymaking will have to be intervened if cryptos take an ecological toll.