The Indian business ecosystem pinned its hopes on the Union Budget after thousands of small and medium enterprises were severely affected by the ongoing pandemic, especially the devastating second wave and the (diminishing) third wave. Among those who were hopeful were crypto investors and enthusiasts, who feared significant losses due to the uncertainty regarding the stance the Indian government was likely to take on recognizing and regulating cryptos.
On February 1, those hopes for recognition weren’t dashed as Finance Minister Nirmala Sitharaman announced that digital assets would be doubly taxed in terms of gains as well as the source.
However, the government made it clear that while tax regulations would be in place for crypto assets, making the assets a legal tender was out of the question. Which means they will be taxed as any other investment such as gold, however, they cannot be used to make any purchases.
The government decision to not legalize crypto assets raises an important question: is the government wary of crypto assets in particular or of the underlying decentralized technology?
Blockchain entrepreneurs and enthusiasts say many initiatives announced as part of the Budget can become much easier to implement if blockchain technology is used. An example is the creation of a digital currency that would be rolled out by the Reserve Bank of India (RBI).
Additionally, Sitharaman announced the government’s efforts to digitise personal identification under the “one nation, one registration” initiative, which is aimed at allowing microloans for the unbanked, spearheaded by the fintech sector. That is a laudable step by the government, with a valuable investment in the digital ID for the nation’s population, especially to include the unbanked.
Personal identity management is a cornerstone of government services. But legacy data management tools fail to provide secure yet rapidly accessible and updateable identities. One of the main benefits of digital identity is as a governance framework that proposes strategic pathways, enabling interoperability between off-chain digital legacy systems and government infrastructure using blockchain technology.
Blockchain technology comes equipped with local governance solutions from the provenance of private property and title records and recording private business transactions from business agreements, licenses, registration and intellectual property registration to personal credentials such as passport, visa, driver’s license and birth records that are securely. stored in blockchain systems.
Currently, billions of dollars are spent – often to grease bureaucracy’s wheels – to track individual records. Transactions range from creating, correcting and updating private property and title records, to recording licenses, intellectual property registration and business agreements. Personal credentials such as passports, visas, driver’s licenses and birth records come at a cost with each transaction. To add to the complexity of personal identity tracking, there is hardly any provenance recorded of who, when and how each transaction occurs.
Leveraging a new data management structure that uses distributed ledgers, governments can offer their citizens the streamlined, on-demand services users have become accustomed to from private vendors such as Alphabet and Meta in the digital era. At the same time, governments can go above and beyond tech giants by offering improved data security, unprecedented transparency and accountability.
Globally, close to 5 million people are affected by the theft of their personally identifiable information (PII). The trend is growing exponentially as the number increases over 40% annually. Although the number is relatively smaller when compared with that of people lacking personal identification altogether, the toll on financial institutions is quite significant, costing banks and other financial institutions over $ 4.5 billion annually.
Indian IT giants are leaders in developing solutions for companies globally. It has essentially made India the “software hub” of the world. It only makes sense for India to take charge and lead the revolution of digitisation of paperwork and governance, and build a robust, sustainable system to provide for a better future.