India’s independent Web3 advisory body, the Bharat Web3 Association (BWA), has prepared a message for Nirmala Sitharaman, who returned as finance minister for a second term this month. In the message shared with Gadgets360, the BWA said that India needs a level playing field for Web3 startups and companies to thrive. Currently, India is in the process of implementing regulations to oversee the Web3 sector. The aim is to ensure that India’s cryptocurrency community is protected from the financial risks that volatile digital assets can expose it to.
Web3 needs government support, says BWA
The BWA, which has a total of 36 members from the Indian crypto industry, has been working with the legislators to help them frame appropriate rules and regulations for the digital assets sector without hampering its growth.
Now that Sitharaman is back and expected to present the final budget for 2024 soon, the BWA has decided to bring the needs of the Web3 sector to its attention.
“The Web3 sector has immense potential to revolutionize multiple sectors including finance, governance and supply chain management, while improving transparency and efficiency. Considering this, we propose that the government develop a clear regulatory framework for Web3, support virtual digital asset (VDA) providers in their customer-centricity and rationalize the tax framework for the digital asset sector,” BWA Chairman Dilip Chenoy said in his statement.
The BWA said it is of utmost importance that Web3 services are allowed to enter the provision of banking services. The advisory body has further urged the government to encourage investment and growth in the Web3 sector. The BWA and its members are concerned that if India delays the creation of a lucrative ecosystem for Web3 to grow in, it could miss out on profitable and technical opportunities, as it did during the Web2 era.
India’s Current Position on Web3
Between 2022 and 2024, India took a number of major decisions regarding Web3 regulations. From July 2021, India brought crypto profits under a tax regime. In India, crypto income is taxed at 30 percent, while one percent TDS is withheld on every crypto transaction. The country brought the crypto sector under the Prevention of Money Laundering Act, which requires all providers of virtual digital assets to collect KYC data of their customers and report any identified suspicious activities to the relevant authorities.
In December 2022 and 2023, India held the presidency of the G20 group of countries. As part of its presidency, India worked with the International Monetary Fund (IMF) and the Financial Stability Board (FSB) to create crypto regulations that would operate uniformly at a global level.
Despite India’s gradual approach to warmly welcoming the Web3 sector as part of its financial and industrial ecosystem, the country has seen notable growth in blockchain adoption in 2023, according to a report published by Hashed Emergent, a Web3 venture capital firm focused on India.
From three percent in 2018, India’s global share in the pool of blockchain developers increased significantly to 12 percent last year, the report said. The country also reportedly claimed the top spot for on-chain adoption by 2023 across over 150 countries, which translates to over 35 million trading accounts on top Indian exchanges. The report has predicted that India has a promising future in terms of establishing itself as a leader and early adopter of Web3 technologies, especially due to its large pool of developers.
While the crypto community in India is hoping that Sitharaman will reduce crypto taxes, the finance minister has so far failed to heed the industry’s requests.
