India’s Timechain Labs, which has been educating developers and channeling talent into the BSV ecosystem, is looking to tokenize real-world assets (RWAs) like mutual funds instead of focusing on digital currencies, which remain a grey area in India. The legal status of digital currency is still in limbo, with no specific legislation governing digital currency-based businesses in the country.
Rohan Sharan, who founded Timechain Labs, said that even payment aggregators in India refuse to support websites that have the word ‘blockchain’ in them because of the technology’s association with “cryptocurrencies.”
“They particularly ask any mention of blockchain to be removed for the payment gateways to support the website or the product. That is because of its association with cryptocurrency,” Sharan told CoinGeek in an exclusive interview.
“And that’s why my focus and recommendation has been to rather focus on tokenizing real-world assets, building solutions on real-world assets, and having nothing to do with trading or cryptocurrency at all,” he pointed out.
Although India acknowledged the significance of blockchain, the emerging technology continues to power products behind the scene. Successful applications are the ones that do not even mention blockchain on their website, Sharan said.
“Every type of support from the payment side (is) cut off for all cryptocurrency projects, including blockchain projects. Unfortunately, that is an unfortunate incident that puts the baby out of the bath water,” Sharan added.
Most payment aggregators in India have been shying away from digital assets due to the Reserve Bank of India’s (RBI) apprehensions about digital currencies. RBI had insisted on a complete ban on digital currencies. However, instead of an outright ban, the Indian government imposed one of the harshest taxation on digital asset trading—30% flat tax on all digital currency income with no provision to offset losses and a 1% tax deducted at source (TDS) on all transactions above Rs 10,000 ($118).
India’s Web3 industry has been requesting the government to establish a level playing field for virtual digital assets (VDAs). The requests include reducing TDS from 1% to 0.01%, allowing offsetting and carrying forward losses, and treating income from digital assets at par with other capital assets.
But the requests have so far fallen on deaf ears. While the fastest-growing economy is looking to regulate the digital assets space, Finance Minister Nirmala Sitharaman said in March that ‘cryptocurrencies’ cannot be a legal currency in India.
So, should digital asset traders get used to this punishing taxation in India and just live with it?
“For the foreseeable future, I believe so. For cryptocurrency trading, it is going to be like this. In fact, even stock trading has now got taxations increased for them,” Sharan said.
Success mantra for startups?
Considering India’s skepticism over digital assets and even over the use of the word blockchain in projects, not all tech startups can be successful in India.
According to Sharan, the most successful startups are customer-focused with their end products. For instance, startups that focus on real estate tokenization or getting school properties tokenized would be some of the successful ones.
“In tokenization, recently, a startup has started fractional ownership of ships. It’s not that common to own ships or fractions of a ship, but a ship is a very good investment, and you can actually invest into ships. So, a startup is focusing on that particular vertical of owning fractions of a ship, shipbuilding, and increasing the maritime economy of India. That is a very good opportunity,” Sharan said.
Sharan expects startups to either take an enterprise route or a banking route with a focus on tokenization of financial instruments like shares and bonds. On the other hand is tokenization of ships, real estate, and RWAs.
“Both have their own strategies. One is a long sale cycle in banking and financial instrument space. The other is a shorter sale cycle, easier to target, but also lower margins. So that’s how I see it planning out,” he added.
Watch: India is going to be the frontrunner in digitalization
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