India is emerging as a thriving hub for Web3 projects in the realm of startups, according to the Bharat Web3 Association (BWA). The BWA, an Indian crypto advocacy group established in the preceding year, aims to bridge the gap between industry players and the government. Over the past nine months, the BWA has observed a growing interest among Indians in experimenting with Decentralized Finance (DeFi), drawn by its nearly tax-free and cost-effective alternatives to traditional centralized banking services.
DeFi, characterized by financial products built on public blockchain networks independent of central banks or intermediaries, has piqued Indian curiosity. From loans to exchanges, the DeFi sector has seen a surge in both numbers and applications. Notably, India leads in terms of the value of DeFi transactions for individuals and retailers, driven in part by the substantial volume of remittances from overseas citizens, which can be transferred more swiftly and affordably through cryptocurrencies.
Dilip Chenoy, Chairman of BWA, praises India’s rapid embrace of DeFi, seeing its potential to enhance financial inclusion, especially for Micro, Small, and Medium Enterprises (MSMEs) and those excluded from traditional banking credit. He anticipates a surge in Web3 initiatives from India once a clear crypto regulatory framework is established.
Currently, as the G20 president, India is working on a global set of crypto regulations. In conjunction, the International Monetary Fund (IMF) and the Financial Stability Board (FSB) are preparing a synthesis paper on crypto regulation suggestions, focusing on macro-financial implications and risks to emerging markets. This paper will also emphasize the need for public awareness regarding the pros and cons of engaging with digital assets.
India has submitted its perspectives and concerns on crypto to the G20 group, highlighting the necessity of a coordinated regulatory mechanism due to the cross-jurisdictional nature of virtual digital assets (VDAs). Despite the absence of concrete regulations, India has introduced certain provisions to oversee the Web3 sector, including income tax frameworks, guidelines from the Indian Computer Emergency Response Team (CERT-IN), responsible advertising guidelines from the ASCI, and the inclusion of VDA service providers in the Prevention of Money Laundering Act (PMLA).
The presidency of the G20 by India is expected to conclude in December, coinciding with the anticipated release of the first draft of global crypto regulations. Dilip Chenoy believes that elements of Web3, such as asset tokenization and the eRupee Central Bank Digital Currency (CBDC), will make Indians more comfortable engaging in areas like real estate, art, supply chain, and gaming.
Recently, the Telangana state government in India introduced an Asset Tokenization Standard Framework, providing guidelines for asset tokenization. Based on its analysis of India’s internal response to enhancing the VDA sector’s safety, the BWA’s leadership believes that the G20 nations could develop detailed and accurate crypto regulations.
