Source: Cointelegraph Original: "{title}"
India's contribution to the global Web3 ecosystem (primarily in software development, gaming, investment, and startup financing) has been increasing year by year, despite the local lack of tailored cryptocurrency regulations.
According to the "2024 India Web3 Landscape Report" shared by Hashed Emergent and Cointelegraph, India's share of global Web3 developers has risen from 5% to 12% over the past decade, making it second only to the United States as of 2024.
Growth of Indian developers since 2015. Source: Hashed Emergent
Tak Lee, CEO and Managing Partner of Hashed Emergent, pointed out four key factors driving India to become a global powerhouse in cryptocurrency applications during an interview with Cointelegraph: retail cryptocurrency trading on centralized services, the highest trading volume, institutional applications, and retail DeFi trading.
The driving force behind this growth comes from the younger generation, as approximately 80% of all blockchain developers in India are aged between 18 and 27. Indian developers in DeFi, payments, artificial intelligence, and SocialFi prefer the Solana blockchain.
The report notes that with the continuous expansion of Layer 1 and Layer 2 ecosystems, the development momentum of Ton, Aptos, and Base in other key areas is also steadily rising.
Trends in India's Web3 industry and ecosystem. Source: Hashed Emergent
While funding opportunities and building activities such as hackathons have supported early development, Indian developers point out that employers are reluctant to pay salaries that match global industry standards.
The challenge faced by Web3 gaming projects is that the customer acquisition cost (CAC) for Web3 users is extremely high, and there is a lack of high-quality gameplay to retain Web2 gamers beyond economic incentives. "Lee explained, "Therefore, before integrating blockchain mechanisms or leveraging Indian players' enthusiasm for RMG, some of these games are now focusing on having high-quality gameplay.
Related link: Indian towns adopt Avalanche blockchain for tamper-proof land records
In contrast, investment in India's Web3 sector grew by 224% in 2024 compared to the previous year, with these investments coming from various sources such as local funds, ecosystem funds, and corporate venture arms of major exchanges.
Lee told Cointelegraph that the lack of growth capital in the Web3 sector, along with the absence of traditional venture/growth/private equity funds, makes it difficult for Indian enterprises to raise funds:
Financing situation of India's Web3 financial sector. Source: Hashed Emergent
The report states that the significant increase in Web3 investment in 2024 "signals a gradual recovery, with investors focusing on emerging areas of decentralized finance."
India is a hub for global founders and developers, currently holding the second-largest developer market and the third-largest founder community in the world.
Tak believes that some of the main barriers to large-scale investment are related to "the slower-than-expected growth of some startups." Unclear regulations also hinder investment in Web3 in India.
Despite India's aggressive high-tax environment for cryptocurrencies, small-scale cryptocurrency investments are still growing in India. Traders generally prefer small, frequent trades, with 96% of traders holding positions below $12 and an average leverage of 11x-20x. In India, 1 in 10 futures traders is a woman, highlighting a larger space for participation.
The report calls for not only federal guidance and tax implications but also reforms in cryptocurrency tax relief and reporting systems:
Indian Web3 companies call for progressive regulation for all stakeholders. Source: Hashed Emergent
India's policy wishlist for Web3 includes a regulatory framework for virtual asset service providers (VASP), tax rationalization, simplification of banking and payment channels for Web3 companies, exemption from VASP regulations, and clarification of existing regulations.
Recent regulatory measures, such as the URL blocking of local unlicensed cryptocurrency exchanges, have led to a surge of funds towards self-regulatory solutions (decentralized exchanges) or domestic exchanges regulated by Indian law.
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