Mumbai: The National Institute for Smart Governance (NISG), a publicprivate body promoted by the Centre and software industry lobby Nasscom among others, has recommended that laws and regulations should be based on the functions performed by technologies such as blockchain and not on the technology itself.
It made the recommendation in the draft national strategy on blockchain policy that had sought comments and suggestions from stakeholders.
The National e-Governance Division (NeGD), under the Ministry of Electronics and Information Technology (MeitY), had in July 2019 tasked NISG with preparing the policy.
The policy document also suggests the kind of regulatory approach the government could adopt. Policy and regulations should be clear before enforcement, it said.
“Public statements, whether through the press or formal speeches, are helpful but are not official statements of application by the agency. If an agency intends to enforce its laws in new and innovative ways, it must first notify industry stakeholders of its intent to do so and the way in which existing law applies,” it said.
Stakeholders said that the suggestion was made following the experiences of cryptocurrency startups which are currently using peer-to-peer models due to a restriction on the use of banking channels to trade in cryptocurrency.
The policy paper also recommends the establishment of an office/body to coordinate blockchain strategy across various state bodies. “Given the multi-tiered and multistakeholder structure of regulation, a coordinated approach across departments and sectors is necessary. Not only would this office work to determine applications of blockchain that could cut costs for taxpayers, it could also provide a gateway for entrepreneurs to best understand the laws surrounding blockchain and virtual currencies,” the NISG said.
The NISG said it would conduct stakeholders meetings in collaboration with NeGD across some Indian cities to define the ecosystem for the technology in India.
The policy states that there is a lack of regulatory clarity and not enough awareness in the government on the technology, but the suggestion to set the policy at a national level may not work in case of cryptocurrency regulation, said Tanvi Ratna, CEO, Policy 4.0, a global policy and regulatory advisory firm, commenting on the draft.
“We have seen with all regulatory evolution with the internet era as well that states, if given the space to innovate and compete for talent and growth, can often devise very different approaches. This is definitely the case in the US where states like California, Delaware and New York have usually been well ahead of the federal government and it is also the case in India where states like Karnataka, Andhra, Telangana have often pioneered policy models that get adopted at national levels,” Ratna said.
Source: Economic Times