The Reserve Bank of India (RBI) has been trying to red flag decentralized finance (DeFi) applications as well as initiatives. According to some people working closely with the development, the RBI is seeking authorized recommendations for their workings.
Legal specialists point out that currently, India doesn’t have any regulations for taking care of cryptocurrencies. And, with a crypto asset as disruptive as DeFi, India might not be equipped to handle it. Even when cryptocurrencies have been around for over a decade, there is no clarity regarding cryptocurrencies’ regulations. So, platforms that offer crypto banking or decentralized finances have been operating without any regulations. Another aspect that is in question is which regulators should be monitoring the platforms offering cryptocurrency-based banking services.
Decentralized Finance or DeFi is a monetary ecosystem that is constructed on blockchain applications. It can be used to shop for insurance coverage, remit cash, and even borrow cash. Currently, there are only a few platforms that are providing these services. But, more and more Indian apps are planning to launch their own DeFi companies’ business trackers.
For instance, Cashaa, an online cryptocurrency platform based in London, has partnered with United Multistate Credit Co. Operative Society to launch the first crypto-friendly financial institution in the world, UNICAS, that has physical branches and operations. Through UNICAS, people will be able to access facilities that are similar to bank-saving accounts like crypto loans, loans to buy crypto, and debit cards.
RBI is worried that as more players continue this race to operate applications, it will pose a much larger risk.
