Crypto in India May Finally Get Clarity With the “COINS ACT” Proposal

India’s crypto ecosystem just got a major boost. Web3 firm Hashed Emergent and policy group Black Dot have introduced the COINS Act, a first-of-its-kind model law designed to promote clarity, innovation, and user rights. This is a big step toward establishing a progressive and consistent approach to Web3 policy in the country.

COINS Act Pushes For Crypto Rights

The draft law prioritizes user rights and innovation, while providing regulators with a clear path to follow. Although it is non-binding, the Act offers a clear framework for digital rights like self-custody, protocol access, and financial privacy. It also addressed key issues like high taxes, unclear regulations, and the need for a crypto regulator.

Here’s what the COINS Act proposes:

1. Digital Rights at the Core: The Act firmly protects key crypto-native rights like self-custody, privacy, and the freedom to deploy or interact with code as fundamental freedoms.
   
2. A Crypto-Native Regulator: It suggests a dedicated crypto regulator with limited powers, focused on handling services based in India and not interfering with global decentralized protocols. The COINS Act proposes setting up a dedicated crypto regulator just for India, called CARA.
   
   This new body would focus only on crypto services aimed at Indian users, leaving out traditional regulators like RBI or SEBI. It’s designed to avoid overreach and keep things clear and focused.
   
3. Clear Rules for Control & Custody: Centralized platforms would need full licenses, while non-custodial protocols face a light disclosure regime, and fully decentralized protocols face no compliance.
   
4. Safe Harbours to Boost Local Projects: The Act offers a time-limited safe zone for initial coin offerings (ICOs) in India, giving local crypto projects room to grow without heavy restrictions. Token launches have a two-year window with simpler rules. It also proposes a two-year pause on FEMA regulations to cut through red tape while more crypto-friendly policies are developed.
   
   Additionally, developers are protected from being held responsible for how end users use their protocols.
   
5. Strategic Crypto Reserve: The Act also proposes a national reserve of Bitcoin and crypto assets to strengthen India’s long-term digital sovereignty.

Coins Act To Protect Crypto Rights And Simplify Rules

Currently, users face high taxes and unclear KYC/AML rules, but don’t have basic legal rights like self-custody or privacy. The Act takes a new approach by treating these rights as constitutional protections and giving users a strong legal foundation. The framework also tailors these rights based on users’ control and custody of assets.

Hashed Emergent shared in its report that the Indian government is set to release a long-awaited discussion paper on crypto regulation, a much-needed move after years of slow progress since the 2020 “ban.” It hopes that when the government’s paper drops, the COINS Act will be a pro-innovation blueprint the industry can get behind.

India’s Crypto Confusion Is Turning Costly

Subhash Chandra Garg, the former Finance Secretary, recently pointed out that India’s slow pace on crypto regulation is “costing us dearly”. He notes that while countries like the US are moving ahead with clear rules, India is stuck in confusion and silence. The WazirX and CoinDCX hacks are proof of what happens when there’s no strong legal or security framework.

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