The brouhaha over crypto exchanges, especially the ease with which they were able to formalize and propagate pieces of software code masquerading as financial assets, once again focuses attention on entry norms into sensitive areas like financial services. The fact that crypto exchanges successfully managed to signal legitimacy for their services and offer these tokens to a mostly-uninformed public for over a year provides lessons on how the government and sectoral regulators may need to act before the game gets out of hand.

Technology innovation typically remains a step ahead of regulatory frameworks, which are designed with current practices in mind. Problems occur when these innovations push the envelope beyond accepted codes of social and ethical behaviour. The joint parliamentary committee (JPC) on a proposed data privacy law that recently released its controversial report has pointed to dubious “digital” lending apps proliferating on the Android platform: “At least 60 such loan apps available on Google Play Store were not registered or recognised by the Reserve Bank of India (RBI) as a Non-Banking Financial Company (NBFC). India’s Google Play Store has several such applications owned by Chinese operators or companies including those named like other legitimate fintech companies. For instance, ‘Udhaar Loan’ resembles ‘Udhaar’, a fintech focusing on micro loans, recognised by the Government of India.”

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