cryptocurrency by now. It has created a huge buzz in the modern world right from the day it was introduced. It facilitates P2P and secure transactions.
Besides, it eliminates any middlemen, whether it is a company, financial system, or the government. A lot of organizations are exploring both these technologies. Blockchain is welcomed with great hospitality in India. So, let us see the status of the blockchain and cryptocurrency space in India.
What is India doing?
Several investors are coming up with questions about the legality of Bitcoin in India and on the kind of regulations existing around cryptos and blockchain development company in USA.
Cryptocurrency's advent after April 1, a 30% tax on the profits will be accrued from the purchase and sale of cryptos without any provision of any exemptions or deductions.
Undoubtedly, it is reminiscent of the renowned tax that was levied on puzzles, game shows, lottery, and others.
RBI (Reserve Bank of India) is going to launch its own CDBC, a digital rupee, in the present year. A predictable and stable tax regime has been provided across the booming but still uncharted space. However, by looking at the treatment of the virtual digital assets by the IT departments, one thing is sure they lack sufficient knowledge about the blockchain and crypto space.
Virtual digital asset’s definition by RBI itself is not up-to-mark because it has excluded the phenomena related to tokenization, NFTs, liquid stacking, yield-bearing assets, gamification models related to cryptos like PvP, P2e, and others.
As the nation continues to explore the deployment and application of tokens, blockchain, and digital assets-based solutions, it is essential for the Indian government to properly define a framework for developing its comprehension of the space and the unseen challenges. It will allow all blockchain development services to show their full potential in the Indian market.
The exploration of blockchain technology:
Blockchain and crypto space are considered well in India. Many enterprises are searching for methods to explore these technologies by involving them in day-to-day business processes. Many new start-ups are utilizing blockchain to maximize their efforts. In India, the popularity of blockchain and cryptocurrency is rising in the banking sector, financial services, and the insurance sector.
Besides, Blockchain solutions and services are well-received by the public sector, and they are using it in the management of vehicle lifestyle, registration of land title, management of electronic health records, and farm insurance. Additionally, when it comes to worldwide cryptocurrency adoption, India is ranked 2nd position behind Vietnam.
Use of blockchain technology:
Blockchain technology is popularly called "Truth Machine" and is specifically efficient while linking unrelated parties over a flow of transactions, lending transparency to the stakeholders and nonstatic, complex dependencies.
To be more precise, wherever the role of middleman exists, blockchain solutions can be applied. Solutions like these are highly popular over advertising insurance, SCM, reward spaces, IPR, and others. The automated and decentralized validation’s impact needs to be appreciated and assessed by the government based on the smart contracts on revenue sourcing and related recognition, transaction application, and transfer taxes to the unique types of transaction or new jurisdiction.
The tax treatments related to the virtual digital assets like transactions of virtual currency like charitable contributions, airdrops, “hard forks” tax implications, reporting, valuation, tax accounting, and a lot more were not addressed by the budget. In the very first place, the Indian government needs to opt for effective cryptocurrency development services to track transactions and manage wallets.
The state-of-the-art utilities of cryptos like yield farming and staking can be gone through at a later stage when there will be efficient precedence that is followed by several other countries. A correct regulatory framework has not yet been developed by the IRS to treat such advanced use of cryptos.
Additionally, with the advancement of tokenization, the budget has failed to showcase the underlying cryptocurrency’s treatment. This, in turn, can assume multiple forms based on the designs like Equity token, Utility token, Stablecoin, NFTs, Asset-backed token, and others.
The Government of India should think over if the tokens can be differently designed for legal and operational purposes or tax purposes. Moreover, the government needs to develop expertise surrounding the handling of the tokens' interactions with users, businesses, stakeholders, investors, gateways, fiat, etc., and regulate the IP, compliance, and eventually fix a business place.
Case for DAOs:
The budget also fails to showcase the special treatments that are attributed to the DAOs structuring and regulations surrounding the DeFi lending and the borrowing space, the claimable deductions surrounding the insurance across DeFi strategies of the investors, illegal market practices of participants, protection of sovereignty against the smart contracts and market volatility risks, and a lot more.
Also, not sufficient clarity has been provided surrounding the DAO’s structuring that governs the implementation of India’s CDBC- the digital rupee, information surrounding the underlying blockchain mechanism and its integration over both the private and public chains for both international and domestic transaction, and information surrounding the beneath peg and peg maintenance under highly volatile conditions.
Other factors preventing these technologies from the expansion:
Several industries need to understand the concept correctly. Insufficient knowledge and understanding are the primary obstacles that are blocking the expansion and adoption of blockchain and cryptocurrency space.
Also, several misconceptions exist about these technologies, like blockchain will replace all the existing systems, which is false. Blockchain and crypto can revamp the current processes to unlock new value and efficient sources. All these problems need to be solved to see the change blockchain technology solutions can bring to India.
India is moving towards the era of blockchain technology. And with the advent of technology, new organizations are putting cryptocurrency space to the test. In India the Blockchain and cryptocurrency space is still young, and it needs to be polished. Several misconceptions exist about it, and they must be removed.
So, only if India can pave the correct way for the technology will the full potential of both these technologies be witnessed. Blockchain and cryptocurrency development services facilitated by any reckoned Blockchain development company in USA possess the potential of revolutionizing almost every financial sector in India.