Credit: DH Photo
The Karnataka government is likely to review the Web3 industry’s proposal to create a regulatory sandbox for development and innovation till a proper framework is drawn up, the state’s IT and BT minister Priyank Kharge said on Wednesday while addressing crypto exchange CoinDCX's Unfold event here.
“We eagerly anticipate the establishment of a regulatory sandbox. We firmly believe that a thriving startup ecosystem, especially in disruptive technologies like blockchain and Web3, will forge numerous job opportunities,” he said.
A regulatory sandbox allows the testing and development of new technologies under a controlled regulatory environment that allows for some relaxations.
The proposal to create a sandbox in Karnataka had been put forth by the apex industry body Bharat Web3 Foundation, which had also nudged the government to focus on building awareness, education and thought leadership programs for the web3 space.
Kharge noted that these programs can be implemented as they do not require government funding and thus stand approved.
Bharat Web3 foundation is already in various stages of approval to create a regulatory sandbox in Telangana, Maharashtra and Rajasthan that will allow it to bring transparency and auditing in government schemes.
This comes at a time when a synthesis paper on cryptocurrency regulation was adopted by G20 nations that calls for collaborative and comprehensive regulation of the space globally. The asset class continues to remain unregulated in the country, leading to a lull in innovation and investments.
While addressing the conference, the minister urged the industry to engage with the government to express their needs and educate officials so they are able to formulate better policies. “If we don’t understand a space, we end up banning it and then everyone in the ecosystem suffers,” he said.
Kharge also expressed interest in establishing a Web3-focused centre of excellence in the state, pilot Web3 solutions that can be scaled for government utilisation and even liaison on behalf of the industry with the central government.
“The government of Karnataka is always willing to listen, learn and adapt to new technology,” Kharge noted.
To pilot Web3 solutions for the government, the minister has asked the industry to come up with problem statements that the emerging technology can solve, or provide ready-made solutions that the government can utilise at scale as part of its public procurement policy that is set to be unveiled later this year.