Global cryptocurrency regulation appears to be a top priority for the G-20. India can utilise its presidency to adapt SOPs for overseeing the virtual-digital assets sector to the goals of developing economies.
The first indications that the global regulation of virtual digital assets (VDAs) will be a top issue on the agenda have started to seep in as India prepares for its first G-20 presidency. The prime minister has frequently urged coordinated international action to address cryptocurrencies. Although India has adopted a legal approach, the taxation of cryptocurrencies still has to be reviewed to guarantee that transactions are sustainable. The crypto tax, TDS, offset losses, and challenges with access to the banking system have all so far discouraged transactions in India, causing instability in the industry and driving individual investors to foreign exchanges.
Since the industry’s most recent growth spurt, state actors and international organisations like the OECD, the IMF, and the BIS have increased their efforts to regulate VDAs. Examples include the EU’s Markets in Crypto-Assets Regulation (MiCA) and the US’s Responsible Financial Innovation Act (RFIA). To properly characterise both the assets and the economic communities supporting VDAs, a robust framework that can be used globally has yet to be established.
It is obvious that effective regulation can only be done in conjunction with the proper technological foundation and backing from the local business community. To track, trace, and subsequently enforce VDAs, a dynamic map of people interacting with them both domestically and globally is required. Because they have the technological know-how and the support of domestic businesses to be able to track transactions, certain regions of the US or the EU, for instance, have a more favourable policy position towards VDAs. Due to the global nature of VDAs, there is an urgent need for international regulation of the transnational intermediaries that enable global clients to access the market, including exchanges, asset-backed stablecoins, custodial wallets, remittance platforms, etc.
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In the absence of regulation, these platforms place their foreign customers at great financial risk because they frequently trade on platforms with incomplete disclosures and no legal recourse in the event of bankruptcy. Although recent initiatives to regulate stablecoins in the EU and the US are a positive move, a more comprehensive framework to guide how governments might work with these large exchanges is urgently required.
Additionally, Web3 has the ability to create jobs that will aid in the industrial and digital revolution. According to a rough approximation, there are currently 300 million people who own or use VDAs, 25–30 million of them are in India. At its peak, this market was worth $3 trillion. We may safely estimate that over the next ten years, that number might easily double or even treble. This is assuming that VDA use continues to expand on a trajectory similar to that of the internet so far. According to numerous estimates, the local industry has the potential to contribute more than $1 trillion to the GDP over the next ten years if it is fostered and permitted to engage with the global market given the existing valuations and revenues of major VDA businesses. Many of the 20+ million people employed in the gig economy will be able to explore their services and employment options thanks to Web3 regulation, which can permit the liberalisation of services.
By 2025, India is predicted to have more than 10 million developers due to its significant talent advantage in the global talent market. India is home to significant VDA players, a robust community with more than 25 million members, and two crypto unicorns that are now functioning domestically. India has the chance to create fair playing conditions for VDA businesses for EMDEs at this pivotal time by enacting the necessary regulations for mega corporations and encouraging funding for the development of local regulatory environments. Utilizing the potential is important, and India need to be one of the major nations overseeing the regulation and management of the VDA dialogue at the G20.