Understanding frameworks for Web3 regulation
At TechSparks 2023 in New Delhi, experts from India’s Web3 ecosystem uncovered the current stage of crypto regulation in India and around the world.
In a bid to regulate crypto and Web3 technology, India is focusing on the development of global regulatory frameworks, believing that collaborative discussion can help safely regulate decentralised, digital ecosystems.
India is also pushing for the adoption of blockchain tech for non-crypto use cases.
“A few years ago, people associated crypto with ponzi schemes and scams. Today, there are guidelines to regulate crypto as an asset class through taxation, KYC, and anti-money laundering perspectives,” said Kashif Raza, Founder, Bitinning.
“Due to following these guidelines, startups and other players in this segment are becoming more mature.”
The panellists also noted that even with UPI, netbanking, and other tech, there are several scams happening in India, where the tech is misused to steal funds from unsuspecting citizens.
“The same lens is applied to crypto. But the good part is that India is taking a holistic approach, bringing global powers together and encouraging discussions to regulate crypto and prevent its misuse,” added Ankit Anand, AVP, Policy,.
The panel also recognised the important distinction between blockhain tech and crypto, highlighting that the Indian government has always been in favour of the former--as long as it was possible to regulate blockchains.
“Private, permissioned blockchains have been in favour, since these can be checked, audited, regulated, and controlled. However, the government is uncomfortable with public, open chains which no singular, centralised entity can exert control over,” Raza explained.
Further, if dangerous players on the global front are leveraging such tech for their benefit, it disturbs governments around the world.
This can influence how these governments view, treat, and regulate the tech, noted Anand, as no country wants to see bad actors benefiting from using unregulated tech in their territory.
The panel also noted the USA’s approach to crypto regulation, highlighting the crucial distinction the country has made between stablecoins, Bitcoin (BTC) and all other crypto.
“The US is regulating stablecoins separately, while Bitcoin is regulated as a commodity, and all other alt-coins are regulated as securities,” Raza said, adding, “In India, the RBI doesn’t want crypto to become legal tender, and it is right in thinking so. However, the SEBI has been quiet on crypto being securities. SEBI has not raised any issues despite crypto projects raising funds through token sales.”
Edited by Megha Reddy