With MeitY’s New Blockchain, Crypto Startup Accelerator, Is Regulation On The Horizon?

Cryptocurrency and blockchain startups have been invited to apply for the second cohort of the StartupToScaleUp accelerator, being run by The GAIN (Global Accelerator for Innovation Network) and supported by the Ministry of Electronics and Information Technology (MeitY)

The social media collateral for the startup accelerator mentions that fintech startups working on solutions such as blockchain and cryptocurrency, regulatory tech, insurance tech, lending tech, international money transfers, commerce, mobile payment and consumer banking can apply for the accelerator. 

It is worth noting that the inclusion of crypto startups in an official startup accelerator signals a shift in the Indian government’s stance towards the technology. Last year, cryptocurrency startups were left out of the Reserve Bank of India’s regulatory sandbox, which is a framework that allows fintech startups and other innovators to conduct live experiments in a controlled environment to demonstrate the use cases of their product, under a regulator’s supervision.

In 2018, RBI had barred Indian banks from providing services to domestic crypto exchanges, a decision that was set aside by the Supreme Court in March this year. Crypto industry stakeholders have been urging the Indian government to come up with regulations for the industry.

However, the government has been suspicious of cryptocurrency because of its dangerous use cases, even while it has talked about the use of blockchain technology for governance functions such as the issuance of birth certificates, tracking of convicts, maintenance of land records, streamlining of transactions relating to vehicles, and even for the maintenance and growth of tree saplings.

Besides fintech startups, the startup accelerator is also inviting applications from agritech and manufacturing tech startups. Startups engaged in these sectors, at an early revenue stage, and working with emerging technologies such as artificial intelligence, machine learning, deep learning, big data and blockchain, are eligible to apply. The last date for the applications is December 21, 2020. 

The program, which would be entirely virtual, would have one internal and two external rounds of screening for choosing the startups. 

Time For Crypto Regulations?

The launch of the official accelerator also begs the question of whether the government is getting more and more serious about regulating the sector rather than simply banning the tech. 

In light of a number of crypto scams in recent times, including one uncovered this month in Gujarat, many investors and founders have called for more clarity from policymakers on how to approach customer education or even create awareness about the pitfalls of falling for cryptocurrency cons. With billions of dollars often at stake in crypto scams, regulation for the sector would help prevent significant revenue leakage.