Fintech lobby groups ask govt to allow blockchain ecosystem grow organically

NEW DELHI: The Indian government should resist creating a framework to regulate blockchain for a while, said Global Impact FinTech, a grouping for 200 fintech entrepreneurs, and the Government Blockchain Association, another lobby group.

“It is recommended that the government does not create any framework for the time being and allow the ecosystem to evolve freely with the active support of the government,” the groups said in a response to the government paper on National Strategy on Blockchain.

“Such a framework, when created too early, without adequate understanding of what may be needed and when the ecosystem is not yet mature may not be successful. Creating the national framework can be done at a time when its need will be naturally apparent.”

Both organisations are in favour of letting the blockchain ecosystem grow organically, rather than the government creating one for them. The draft strategy paper by MeitY (Ministry of Electronics and Information Technology) proposes an elaborate framework of applications, services, APIs and platforms.

“It was not very clear in the proposed blockchain framework what will be the role, access and scope of various constituents. It also gave an impression that the framework may result into a scheme wherein things are more centralised (like UIDAI) than distributed, thereby defeating the principal objective,” said the lobby groups.

The government has been in favour of using blockchain as a technology but has been against cryptocurrency, which is the tokenization of the same technology. Recently, it brought a bill in the parliament that proposes to ban all “private” cryptocurrencies.

The industry sees the government both as an enabler and a customer for blockchain technology and expects sustained support for the development of the ecosystem in India.

“The government must come out more clearly in support of blockchain adoption. To understand the nuances of what may be needed, it is suggested the government becomes an active member of some blockchain ecosystems just like some countries like Canada and Estonia have done,” the lobby groups said.

They are also seeking removal of legal and regulatory challenges to the ecosystem and the creation of a government sandbox for blockchain applications.