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Sunday, 30 January 2022

Budget 2022: Discouraging crypto assets will wipe out emerging investing classes, impact blockchain innovations

Crypto adoption in India has grown due to various national and global macroeconomic developments. Millennials and Gen Z are increasingly investing in this new digital asset, with the average age of a crypto investor being less than 28 years. It is no surprise then that India was ranked second in the Global Crypto Adoption Index by Chainalysis in August 2021.

India’s demographic is not only young but also tech-savvy — a foundation laid, in part, by the government’s Digital India initiative equipping younger generations with technological know-how that makes them future-ready for a digital age, characterized by digital assets, blockchain technology, and Web 3.0. There is an unmatched growing pool of talent interested in working with blockchain technology — the technology that powers crypto assets — and driving innovation in crypto and Web 3.0 in India. It is crucial to tap into this emerging workforce and engage them.

Regulatory vacuum

Despite the growing popularity of crypto assets and blockchain technology, the industry currently exists in a regulatory vacuum. In the absence of regulations, leading crypto exchanges today follow self-regulatory practices to ensure customer protection and operate in the best interest of all industry stakeholders. The industry is investing heavily to create awareness about the asset class, with an emphasis on the importance of doing one’s own research before investing. The idea is to build an informed and prosperous crypto ecosystem.

We were hoping for regulatory clarity when the crypto bill was set to be tabled in the winter session of the parliament. However, we support the government’s desire to take more time to have a deeper understanding of this new space. India is one of the few economies that is taking measures to standardise best practices in order to address misconceptions around this emerging asset class. A regularised environment born out of a progressive regulatory framework will encourage more Indians to start their crypto investing journey, promote financial inclusion in line with the government's vision and encourage new technology startups to build world-class products from India

Let’s not miss out on Web 3.0 wave

India missed out on the technological revolutions brought on by Web 1.0 and Web 2.0 that gave rise to giants like Amazon, Google, Microsoft, and Facebook. We cannot afford to miss out on the Web 3.0 wave. Discouraging crypto assets will not only wipe out the emerging investing class but will also grossly impact all crypto and blockchain innovations and set us back as a nation.

Indian entrepreneurs who want to build companies on blockchain will have to explore international prospects that will support their ambitions and that can lead to another round of brain drain. India has the potential to become the global leader in Web 3.0 that is a net exporter of technology, instead of a net importer. The next Google or Amazon might be built on blockchain and can emerge from India.

Clarity on taxation

Even as we wait for a comprehensive regulatory framework, from the upcoming Budget, we are hoping for clarity on taxation. This can greatly benefit the growing industry and in turn the exchequer.

Over the years, crypto has become a trillion-dollar industry that furthers the benefits of a safe, secure, and transparent digital economy to society at large. This evolution needs to be acknowledged. We hope crypto is categorized as an asset class that has the potential to open many doors to industry-first innovations and global technological leadership.

The author is Chief Business Officer, CoinSwitch Kuber-cryptocurrency exchange. Views are personal.

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