Union Minister of State for Skill Development and Entrepreneurship Rajeev Chandrasekhar has cleared the air over the legal status of Indian firms operating in the Web3 space. According to him, no law prevents companies from innovating in the virtual currency sector.
Chandrasekhar disclosed with local publication Inc42 amid swirling speculation that the government is stifling the growth of the digital asset industry in the country. He countered the accusations saying that India’s government is focused on making it easier for companies to get involved in the space.
“There is no delay in any policy. There is nothing to prevent anyone from innovating in the crypto or Web3 space,” said Chandrasekhar. “If you are a startup, and you are innovating in crypto or blockchain or Web3, there is absolutely nothing in the law that prevents you from doing it.”
However, he added that the companies should tread cautiously to avoid breaching the existing financial laws as they explore the ecosystem. Chandrasekhar warns that the Reserve Bank of India (RBI) has put in place some limitations and exchange control restrictions in using the rupee for cross-border remittances.
“But when a crypto user or entrepreneur decides to start a crypto exchange and start gatewaying the rupee directly into crypto in violation of the foreign exchange rules [sending money abroad without complying with FEMA, then there is a problem,” Chandrasekhar said.
India has been dragging its feet in passing a bill that will offer clarity to investors and other stakeholders in the space. The government has only established clarity relating to the taxation of the asset class by imposing stiff tax requirements for users and industry service providers. However, the spheres of the metaverse and non-fungible tokens (NFT) remain unclear to aspiring investors.
Mixed reaction from the government
At the surface level, it appears as though India is pulling all the stops to transform itself into a digital asset hub. The government has launched several reforms, like easing the listing requirement for tech companies, offering extended tax holidays, and angel abolition.
Despite these policy reforms, the government has continued to eye virtual currencies with skepticism, culminating in the near blanket ban of the entire asset class. The imposition of a stiff tax requirement of 30% has been described as a move designed to “kill” the nascent industry.
India’s Finance Minister Nirmala Sitharaman has declared that the country’s adoption rate of blockchain will rise to 46% in the coming years, but it remains unclear if digital assets are in the picture.
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