The Union government is all set to bring a Bill in the winter session of parliament to regulate cryptocurrencies in India. What does this mean for the asset class? Officials indicate that supportive regulations for cryptos could generate $1 billion in tax revenues annually for the government.
To decode what cryptocurrency regulations would mean and also discuss the Metaverse and the hype surrounding Metaverse tokens, CNBC-TV18 caught up Aditya Singh, Co-Founder, Crypto India and Nischal Shetty CEO of Wazir X.
On the Metaverse (virtual world) and metaverse tokens, Shetty said, “A mental model for understanding the metaverse is like this ― in the offline world today you have cities, land, cars, and such like. The reason why people want to buy these is that they hold value. You can sell them as an investment or use them for various activities. Now, this is what is being replicated in the online world."
He added, "Until now, what you had was, let's say, you play a game, you are playing for leisure, there's nothing much to it, and you are wasting time. Now, what happens is, whenever you play a game, you are sort of building a character ― you can sell that character tomorrow. If you are buying a digital land inside a game, you can sell that land in the game, or you can take that land to a platform where you can sell that away for crypto and eventually convert that crypto into real money.”
Therefore, what is happening is that the real world that exists is now getting the opportunity to be replicated on the online world and that's what the metaverse is ― it is all about ownership. And this is where Non-Fungible Tokens (NFT) make that possible. "Because you can have unique characters, unique clients, you can have ownership of the digital world. That is what the metaverse is. It is still evolving and everyone wants to get in because they realise that this is the early mover advantage that they can get," explained Shetty.
On cryptocurrency regulations, Shetty said, as an industry, they have been pushing for regulations for multiple reasons, the most important being able to build a clean industry where there is consumer protection, where companies do the right things, even like collaborating with law enforcement when needed, ensuring there are no bad actors in the ecosystem.
"The second reason is as a nation ― we are a tech nation, we are a nation where software is one of the most important industries today ― and crypto happens to be that evolution of the software industry and people are calling it Web 3.0. So, with regulations, we can push more start-ups in the sector, push for more funding in the sector, and it will help India be one of those top leaders in this whole crypto technology sector," he added.
The government's main aim is to prevent innocent retail investors from getting caught up in a lot of the ads, a lot of the WhatsApp forwards that are being seen in the crypto universe. There is no real data source for this ― in the crypto universe you don't know what source to trust. So, if a regulation is put in place, how can one be sure it can impact the asset class positively?
Singh said, since a lot of people are now getting into crypto, the major need of virtual reality (VR) is to create more awareness, so that the people are able to understand FOMO, the need to evaluate the coins, and which platforms to use. That is one of the major concerns. The existing exchanges have their own platforms wherein if they onboard the users, they try to educate them about the do's and don'ts of cryptocurrencies, and the ways to keep their cryptocurrency safe.
“If the regulations do come in, nationwide awareness campaigns or something of that sort will be very beneficial for the entire community, so that the new people entering crypto get an idea of this space, an awareness of the do's and don'ts so that they don't fall prey to scams, because there have been cases where bad actors have shown up. Wherever there is a possibility of making money, some people always find ways to fool others. So, if some sort of an awareness campaign is rolled out nationwide, that will be quite positive,” said Singh.
Click on the video for the entire interesting discussion