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Tuesday, December 5, 2023

Will the Indian Government Regulate Metaverse Like Crypto?

With its thriving tech sector and culture of entrepreneurship, India is prepared to help build the metaverse.

The concept of the metaverse is new and there is still considerable debate about how to define it. All definitions, however, assume that extended reality (XR) – a combination of augmented, virtual and mixed reality environments that are accessible and interactive in real-time – will be the entry point for the metaverse. These technologies have been the harbinger of innovative applications in fields such as gaming and entertainment, enterprise solutions and simulations, as well as in military and defense. In addition, blockchain technology is presently expected to play a major role in building the metaverse, because it permits a verifiable claim of ownership and transferability of digital assets.

The vision seems to be that, together, XR and blockchain will produce applications that increasingly blend our physical and digital identities, enabling new forms of social and commercial interaction. The metaverse remains aspirational, but that hasn’t stopped companies across the spectrum from making plans for engaging with it. The most vocal proponents are western tech companies, even as the global discourse on the topic is influenced by economic powerhouses such as China and South Korea. But India also has a role to play in building the metaverse, and a range of factors suggest it is primed to do so.

Will the Indian government regulate metaverse like crypto?

So, the answer to this crucial question is ‘NO’. On Monday, the government made it clear that it has no plans to apply any regulations on Metaverse or Web 3.0, as these technologies are still evolving, although the government has imposed a steep 30 percent tax on income from trade in cryptocurrencies and a 1 percent TDS levy on every such transaction, starting from April 1, 2022.

Finance Ministry sources have said that they are aware of the emerging new technologies and rapid proliferation of technologies like Artificial Intelligence, Blockchain, Drone, Augmented Reality, Metaverse, and Web 3.0. They further added that the government has already formulated national strategies for Artificial Intelligence and Blockchain.

The government won’t allow tax breaks on infrastructure costs incurred. At the same time, mining of crypto assets won’t be treated as a cost of acquisition, Minister of State for Finance Pankaj Chaudhary told lawmakers in parliament on Monday.

The clarification by the minister is a further setback to an industry that was slapped with a steep tax rate of 30 percent on gains from digital assets’ transactions in the budget unveiled last month. And the lack of regulation is a good thing for metaverse technology, components of which have already been developed within online video games.

What is a metaverse?

As of this writing, a typical metaverse is an interactive 3D world, and the concept’s roots are in science fiction. Author Neal Stephenson actually coined the term in his 1992 novel Snow Crash, where he used it to describe a next-generation version of the internet. He wasn’t far off because the concept of a metaverse intersects with gaming, information technology, and 3D rendering.

Gaming may be important to “the metaverse” and how it evolves, but it’s not the only field with a heavy stake. Expectations for the metaverse continue to grow as developers and creators offer additional improved services to access it. Likewise, it all leads to a more connected world, which resembles Meta’s vision for the internet of the future.

What is Web 3.0?

Web 3.0 is a vision for the next phase of the internet’s development that imagines a decentralized ecosystem based on blockchain technology. It would mark a departure from the centralized mega-platforms and corporations that dominate the ecosystem currently and, proponents claim, fix what’s wrong with the internet of today along with reversing the erosion of democracy. Web 3.0 is the latest Internet technology that leverages machine learning, artificial intelligence, and blockchain to achieve real-world human communication. The icing on the cake is that web 3.0 not only allows individuals to own their data but they will be compensated for their time spent on the web.

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