The blockchain industry in India is calling for regulatory clarity on cryptocurrency trading and urging the government to draft legislation for monitoring digital assets. While countries like the US, UK, and Hong Kong have embraced crypto assets as legitimate trading instruments, there is a need for a coordinated global policy framework to mitigate risks and foster innovation, according to the Bharat Web3 Association (BWA).
To achieve this, the BWA has proposed two options to the government. Firstly, the formation of a panel that includes industry representatives to discuss model legislation. Secondly, the release of a discussion paper within the first 100 days of the new government forming after the Lok Sabha polls.
One key area of concern for the industry body is crypto taxation. Currently, cryptocurrency trades in India attract a 1% tax deducted at source (TDS) and a 30% capital gains tax without any provision for offsetting losses. The BWA suggests reducing the TDS to 0.01% and rationalizing other tax norms.
Furthermore, the BWA emphasizes that the web3 ecosystem is not limited to just crypto or Bitcoin. India is home to over 1,000 web3 startups, making it one of the largest ecosystems in the world. The BWA encourages the expansion of subcategorization beyond ‘Bitcoin & Blockchain’ under the Startup India initiative.
In addition, the BWA proposes that the Office of the Principal Scientific Advisor focuses on research in blockchain, decentralized finance (DeFi), virtual decentralized applications (VDAs), and non-fungible tokens (NFTs). This research could contribute to enhancing emerging technologies like artificial intelligence (AI) and provide policy advice, R&D support, and pilot projects across various ministries and departments.
Dilip Chenoy, Chairperson of the BWA, emphasizes the talent and potential of India’s web3 industry and hopes that the government takes their proposals into consideration. By establishing India as a global hub for web3, the country can embrace innovation and lead in this rapidly evolving industry.
While the article discusses the call for regulatory clarity on cryptocurrency trading in India and the proposals put forward by the Bharat Web3 Association (BWA), there are several additional facts and market trends that are worth considering.
1. Growing Crypto Market: The cryptocurrency market in India has seen significant growth in recent years, with an increasing number of individuals and businesses embracing digital assets. According to a report by Coinpaprika, India ranks as the second-largest country in terms of cryptocurrency adoption, after the United States.
2. Rise in Blockchain Startups: India has witnessed a surge in the number of blockchain startups operating in the country. These startups are working on innovative solutions across various sectors, including finance, supply chain management, healthcare, and more. The government’s support for the blockchain industry could further fuel this growth.
3. Regulatory Challenges: India’s regulatory environment for cryptocurrencies has been uncertain and has faced several challenges. The Reserve Bank of India (RBI) had previously issued a circular in 2018 banning banks from dealing with cryptocurrency exchanges. However, the circular was later overturned by the Supreme Court in 2020, providing a boost to the industry. The government’s approach to blockchain regulation will play a crucial role in shaping the future growth of the industry.
4. Potential Advantages: Embracing blockchain technology and cryptocurrencies can offer several advantages to India’s economy. It can boost financial inclusion by providing access to banking services for the unbanked population, facilitate efficient cross-border remittances, enhance traceability and transparency in supply chains, and reduce fraud in government subsidies and welfare programs.
5. Key Challenges: While the potential benefits of blockchain and cryptocurrencies are significant, there are also challenges that need to be addressed. These include concerns related to money laundering, terrorist financing, regulatory compliance, and consumer protection. Finding the right balance between fostering innovation and mitigating risks will be crucial for the government in designing effective regulatory frameworks.
In terms of market trends and forecasts, it is important to consider that the global blockchain market is projected to grow significantly in the coming years. According to a report by MarketsandMarkets, the market size is expected to reach $39.7 billion by 2025, with a compound annual growth rate (CAGR) of 67.3% during the forecast period.
Overall, effective regulation that provides clarity and fosters innovation in the blockchain and cryptocurrency space in India is crucial. By embracing this technology and creating a favorable regulatory environment, India has the potential to become a global leader in the web3 industry.
[Click here](https://coinpaprika.com/countries/) to explore more about the cryptocurrency adoption in India.
[Click here](https://www.marketsandmarkets.com/Market-Reports/blockchain-technology-market-90100890.html) to read more about the forecasted growth of the global blockchain market.