India is making its name as a lucrative startup hub for Web3 projects with its large pool of developer talent, the Bharat Web3 Association (BWA) has said sharing an analysed observation. India’s own crypto advocacy group, the BWA, was established in November last year, aiming to bridge the communication gap between industry players and the government. In the last nine months, the BWA has observed that Indians could ramp-up experiments with DeFi because it offers almost tax-free, cheap alternatives to traditional, centralised banking services.
DeFi or Decentralised Finance lets financial products appear on a public blockchain network, which is not regulated by a central bank or intermediary. People looking to deposit their money somewhere other than a bank can consider investing in DeFi protocols.
Indians are particularly being drawn towards exploring the DeFi sector because from loans to exchanges, DeFi applications are exploding in numbers and use-cases. As per Finder.com, the value of DeFi transactions for individuals as well as retailers is highest in India. A contributing factor to this trend is the large volume of remittances that is wired back to India from its citizens working abroad, which can be sent faster and more cost-effectively through cryptocurrency.
“India is among the fastest global adopters of DeFi, which can boost financial inclusion through expanded access to credit to the MSME sector and those unable to access credit from banks. The quality of startups being founded in India is top notch,” Dilip Chenoy, Chairman, BWA told Gadgets 360.
Once the nation gets its framework of crypto laws, Chenoy notes that there will be a boom in Web3 initiatives from India.
At present, India, as the president of the G20 nations is working on a set of crypto rules that will work on a global level.
On August 1, the country posted a presidency note on crypto, giving a status update on the crypto laws work.
Breaking:rotating_light:: India:flag-in:, as the head of the G20 nations, is spearheading the establishment of coordinated global regulations for #Crypto assets.
The presidency note shared below has the potential to redefine global crypto regulations.:fire:
Here’s everything you need to know:thread::point_down: pic.twitter.com/OxL8JzFqsy
— KoinX (@KoinXOfficial) August 3, 2023
As per that note, the Interntional Monetary Fund (IMF) and the Financial Stability Board (FSB) are expected to be jointly presenting a synthesis paper on their crypto rules suggestions by the end of this month.
This paper will note the possible impacts of crypto on macro-financial implications while also outlining the risks of crypto to emerging markets and economies under development. In addition, the paper is also expected to highlight ways to spread awareness around crypto, so that everybody who chooses to engage with digital assets are aware of the pros and cons.
India has also submitted a similar note with its ideas, suggestions, and concerns around crypto to the G20 group as its president, Ajay Seth, a senior official of the Indian Finance Ministry had said last month.
“The very nature of virtual digital assets (VDAs) being cross-jurisdictional, has made the case for a coordinated regulatory mechanism for such assets rather than individual countries adopting different stances. The regulatory landscape for virtual digital assets is continuously evolving,” Chenoy said.
He further added that despite India not having a concrete regulation to oversee Web3, the sector has been explicitly brought within the ambit certain provisions.
These include income tax framework for VDAs, the Indian Computer Emergency Response Team (CERT-IN) guidelines to ensure compliance of VDA service providers, the ASCI guidelines for responsible advertising and the latest inclusion of VDA service providers in the Prevention of Money Laundering Act (PMLA) recognising them as reporting entities.
“These developments can signal India moving in the right direction, wherein regulators understand the risks associated,” Chenoy added.
India’s presidency of the G20 will conclude in December this year, which is also around when the first draft of global crypto rules is expected by.
Meanwhile, Chenoy said, Web3 elements like asset tokenisation and the eRupee CBDC are likely to make Indians more comfortable with dabbling in the Web3 sector via real estate, art, supply chain, and gaming among other avenues in the times to come.
Recently, the Telangana government in India announced the launch of its Asset Tokenisation Standard Framework, providing a common set of rules and guidelines for the tokenisation of assets.
After having analysed India’s internal response to making the VDA sector safer, the BWA chief has said under its leadership, the G20 nations could just get the crypto rules detailed and right.
