Three blockchain companies have set up operations in Visakhapatnam, the designated Fintech City of Andhra Pradesh, even as questions swirl over the security framework applicable to the emerging blockchain industry.
While the blockchain technology, which allows digital information to be distributed but not copied, has been finding wider applications across industries, it has found strong traction in the crypto-currency segment. It is the crypto-currency segment that has a lot of room for misuse, according to Pavan Duggal, a Supreme Court lawyer who specializes in cyber laws.
Meanwhile, the three companies – Black Cactus, Zebi, and Belfrics – that have set up operations in Visakhapatnam and are in the process of setting up the mandatory training academy to train people to work in the industry, says JA Chowdary, special chief secretary and advisor (Information Technology) to the Andhra Pradesh chief minister.
“Zebi already has a training academy and is in the process of completing the training of some developers in blockchain technology,” Chowdary told. The blockchain companies are in the Fintech Valley in Visakhapatnam. The three companies are promoted by NRIs, and they have operations in the United States, Singapore, and Malaysia.
Even as the three blockchain companies go about ramping up their operations, Duggal says that currently there are no regulations which blockchain companies, particularly those in the crypto-currency segment, need to comply with.
“It is good that the Andhra Pradesh government is promoting fintech companies to set up shop in Fintech Valley, but they must ensure that such firms have “minimal enablement and robust regulation to protect the interest of customers,” Duggal told in an interview earlier this year.
“The Andhra Pradesh government should be working in tandem with the centre to devise a robust regulatory regime for the fintech sector, given the number of horror stories we keep hearing about how some fintech company ran a get-rich-quick scheme to relieve customers of their money, and then disappearing. Apart from the Consumer Protection Act, the state government should enact rules under the IT Act of 2000,” he said.
“Section 90 of the IT Act gives individual states in the Union to make rules regarding a particular sector, in this case, the fintech sector. It can also set up a regulatory authority at the state level to ensure compliance of fintech companies in the state,” Duggal said.
The AP government appears to have taken cognizance of the need for a security and regulatory framework for the fintech blockchain companies. Chowdary is leading a delegation from India to London in the United Kingdom to deliberate on the security frameworks at the International Organisation for Standardization.
The conference began on Monday, and Chowdary, who is also chairman of the blockchain standards committee of the Bureau of Indian Standards, will be working with other countries to formulate the framework.