India has just introduced the Coin Act – a pioneering model law aimed at protecting user rights and promoting innovation in the field of cryptocurrency, creating a sustainable and transparent Web3 development foundation.
The Coin Act proposes basic digital rights such as wallet self-custody, privacy rights, while establishing a specialized cryptocurrency regulatory agency to simplify regulations, reduce high taxes, and promote the development of domestic projects.
MAIN CONTENT
The Coin Act prioritizes the protection of self-custody rights and the privacy of cryptocurrency users.
A proposal to establish a separate cryptocurrency regulatory agency with a limited scope, focusing on domestic services.
A clear regulatory framework that supports domestic projects through safe harbor periods and creates strategic reserves.
What is the Coin Act and what are its objectives?
The Coin Act is the first model law for cryptocurrency in India, focusing on digital rights and encouraging innovation in the industry. The law proposes a transparent governance model, providing users and developers with clear rights while limiting overlap from existing agencies.
According to the report from Hashed Emergent (2024), the Coin Act defines self-custody, protocol access, and financial security as basic rights that need constitutional protection, thereby creating an appropriate legal corridor to foster a creative Web3 environment.
Who will regulate cryptocurrency under the Coin Act?
This law proposes the establishment of a specialized cryptocurrency regulatory agency named CARA, focusing on overseeing cryptocurrency services aimed at Indian users with limited authority, avoiding impacts on global decentralized protocols.
CARA will partially replace the role of traditional agencies such as the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI) in the field of cryptocurrency, helping to reduce overlap and enhance regulatory efficiency.
The Coin Act aims to 'create a suitable regulatory agency, helping the industry build a standardized and sustainable development context, protecting user rights while promoting the Web3 ecosystem.'
Statement from CEO Hashed Emergent, 2024
How does this law protect the rights of cryptocurrency users?
The draft law emphasizes self-custody rights for digital assets, privacy, and freedom of access to protocols as constitutional rights, providing a stronger legal foundation for cryptocurrency users in India.
The Coin Act also clearly defines the scope of control and management of digital assets: centralized platforms must have full licenses, platforms that do not manage user wallets only need to comply with a simple disclosure regime, while decentralized protocols are not bound.
How does the Coin Act support the development of domestic cryptocurrency projects?
The law creates a two-year safe harbor for initial coin offerings (ICOs) in India, allowing domestic projects time to develop without facing excessive complex regulations.
The law also proposes to postpone the application of FEMA regulations for two years to reduce administrative burdens while protecting developers from liabilities related to how end-users interact with their protocols.
Establishing safe harbor zones and delaying the implementation of complex regulations helps to 'improve the cryptocurrency investment environment, create a competitive playing field, and encourage innovation in India.'
Cryptocurrency policy expert, report 2024
What does the national cryptocurrency reserve mean in the Coin Act?
The Coin Act proposes the establishment of a national reserve comprising Bitcoin and other cryptocurrencies to enhance digital sovereignty and create long-term economic leverage for India in the international market.
This strategy is also expected to help India better control the supply of digital assets and prepare for global DeFi trends.
How does the Coin Act address current legal issues in India?
Previously, cryptocurrency users in India faced high taxes along with unclear KYC/AML regulations, while lacking basic rights such as wallet self-custody and privacy protection.
The Coin Act provides a clear legal framework, flexibly regulating based on the level of asset control by users, while converting digital rights into constitutional protections. This is an important step towards reasonable and fair cryptocurrency policy.
Criteria Before Coin Act After Coin Act Self-custody rights Not clearly protected Constitutionally protected Regulatory agency Fragmented, overlapping Specialized agency CARA Tax & KYC/AML regulations Complex, inconsistent Clear, simplified ICO safe harbor None 2 years with simplified conditions
Frequently Asked Questions about the Coin Act
Is the Coin Act mandatory in India?
The Coin Act is a non-mandatory draft that provides a clear legal framework to help lawmakers develop cryptocurrency policies. It is expected to become an official guideline in the future.
How will CARA operate within the current regulatory system?
CARA is a separate cryptocurrency regulatory agency, only overseeing services aimed at Indian users, without affecting global decentralized protocols, helping to reduce overlap with agencies like RBI or SEBI.
What does self-custody mean for users?
Self-custody rights ensure that users directly control assets in their own wallets without dependence on or control by third parties, which is a core right to enhance privacy and security.
Does the law support domestic cryptocurrency projects?
The law creates a two-year safe harbor for token issuance, allowing domestic projects to develop smoothly, reducing legal burdens and complex procedures in the early stages.
What impact does the national cryptocurrency reserve have on the market?
Creating strategic reserves helps enhance financial strength and national digital sovereignty while providing a stable foundation for long-term cryptocurrency development policy.
Source: https://tintucbitcoin.com/an-do-de-xuat-luat-tien-dien-tu/
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