Regulation
G20 influence, MiCA regulations and India’s VDA strategy
Global Crypto Regulation: G20 Influence, MiCA Regulation and India’s VDA Strategy
2024-05-03 12:02:08 ET
At the last G20 summit, India played a major role in pushing for global rules governing organizations on crypto assets. He noted that virtual currencies were transnational and therefore required international cooperation to be well regulated and their broader macrofinancial effects managed.
Global Crypto Regulation Efforts
The MiCA regulation, which is expected to be implemented in the European Union next year, could completely transform the crypto-asset landscape.
Dubai International Financial Center (DIFC), one of the leading financial hubs in the MEASA region, introduced the Digital Assets Law – the first in the world. The UK government wants to launch Web3 technologies and plans to have formal legislation in place regarding the regulation of cryptocurrencies by 2024.
Bitcoin integration
The U.S. Securities and Exchange Commission (SEC) has taken another step toward mainstreaming Bitcoin by approving 11 exchange-traded funds (ETFs) that allow investors to own Bitcoin in cash via a regulated format.
These ETFs have been backed by large asset managers and crypto financial service providers, representing an important step towards broader adoption in this space. This announcement was accompanied by an increase in value; with bitcoin reaching over $70,000 per coin, which is its all-time high.
India’s Approach to Virtual Digital Assets (VDA)
Even though much progress has been made in regulating crypto assets within the G20 and in major financial centers, India is still determining its approach to policy implementation and development. regulations around virtual digital assets (VDA).
In India, VDAs as well as the Web3 space as a whole have huge potential and possibilities. According to Hashed Emergent’s “India’s Web3 Landscape 2023” report in collaboration with KPMG India, CoinSwitch, Devfolio and Kratos Gaming Network, the country has one of the largest Web 3 ecosystems in the world, where more than 1,000 startups based here employed 12% of all global Web3 developers.
There is a need to change the regulatory narrative from “when” to “how” in the growing area of virtual digital assets (VDA). For this reason, India could consider adopting a digital asset strategy that promotes responsible regulation while fueling the growth of the sector.
The role of government in the development of Web3
Government involvement is imperative to exploit the full potential of Web3 and improve business and living environments. This can include creating centers of excellence, skills development programs and regulatory sandboxes, aimed in particular at supporting entrepreneurs, developers and service providers.
The simplification of know-your-customer (KYC) processes, proposed in this year’s union budget speech by Finance Minister Nirmala Sitharaman and discussed at the Financial Stability Development Councils (FSDC), is expected to be considered important.
Making C-KYC accessible to compliant exchanges and revising the VDA tax regime to reduce TDS rates and streamline tax provisions will help minimize the risks of revenue leakage apart from AML/CFT concerns.
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