India’s Top Crypto Lobbying Group Expects Significant Regulatory Action by Mid-to-Late 2025: Interview

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Jai Pratap

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Jai Pratap

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Jai serves as the Asia Desk Editor for Cryptonews.com, where he leads a diverse team of international reporters. Jai has over five years of experience covering the web3 industry.

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December 4, 2024

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While India continues to rank as the world leader in grassroots-level crypto adoption, the regulatory framework governing the country’s crypto and Web3 landscape remains a work in progress. In an exclusive interview at the India Blockchain Week 2024, Dilip Chenoy, Chairman of the Bharat Web3 Association (BWA) and the former Secretary General of the Federation of Indian Chambers of Commerce and Industry, outlined the ongoing challenges and opportunities for India’s burgeoning virtual digital asset (VDA) ecosystem.

BWA is an industry group comprising all the top crypto companies in the country.

“There is no comprehensive regulation covering the Web3 space in India yet,” Chenoy said, adding that while the Ministry of Finance and Ministry of Electronics and Information Technology (MeitY) are engaging with industry stakeholders, the absence of clear guidelines creates hurdles for developers, exchanges, and investors alike.

Fragmented Crypto Regulatory Landscape

“If you’re doing anything with VDAs, you are regulated by the Financial Intelligence Unit (FIU) for anti-money laundering and counter-terrorist financing compliance. If you advertise, you’re governed by ASCI guidelines. And if you’re earning income on crypto, you’re subject to tax laws, including a 30% income tax and 1% TDS.”

Chenoy also pointed to the ongoing collaboration between state governments and blockchain developers for localized use cases, such as caste certificate issuance and digital university records, as signs of progress. However, he acknowledged the challenges developers face in registering companies and adhering to undefined regulations for Web3 startups in India.

BWA’s Push for Best Practices

In the absence of comprehensive regulation, BWA has been proactive in creating a framework for self-regulation. “We’ve developed token listing guidelines, cybersecurity protocols, and consumer protection guidelines,” Chenoy said. These initiatives aim to address critical concerns around security, compliance, and fair trading practices.

The association has also launched the ABCD Alliance (Alliance for Blockchain and Crypto Collaboration) to improve coordination in combating fraud, recovering stolen funds, and advancing user interests.

“We are benchmarking against global self-regulatory bodies to identify gaps in our ecosystem,” Chenoy noted, emphasizing that such efforts are vital to instill confidence among regulators and users.

Chenoy outlined three major concerns regulators have regarding VDAs: crime, consumer protection, and economic stability. “We need to eliminate the use of crypto for illegitimate activities, ensure strong compliance mechanisms, and address fears around the dollarization of the Indian economy,” he said.

For instance, he suggested that introducing a CBDC-based system for crypto transactions could help alleviate concerns about foreign currency outflows. “If users can only invest in VDAs through a CBDC, it ensures traceability and compliance,” Chenoy proposed.

Raising Awareness Among Authorities

A critical challenge lies in educating law enforcement and policymakers about the complexities of crypto scams. “We are working with authorities to train personnel at all levels, including constables, who often lack the knowledge to handle such cases effectively,” Chenoy revealed.

He also stressed the importance of community-driven initiatives to educate users. “Exchanges globally are running education campaigns, and in India, this effort is crucial to change the narrative,” he said.

Regulatory Milestones on the Horizon

Looking ahead, Chenoy expressed optimism about the government adhering to timelines set under the G20 roadmap. “The Financial Stability Board and International Monetary Fund have laid out guidelines, and we hope to see significant regulatory action by mid-to-late 2025,” he said.