A total of 36 Web3 firms that are BWA members have contributed suggestions for the formulation of these guidelines.
Joining the Indian government in regulating the crypto sector and making it safe for engagement, the Bharat Web3 Association (BWA) has laid down some rules for service providers in the crypto sector to adhere to. The Web3 industry group has released guidelines for crypto exchanges to follow while considering the listing of new altcoins on their platforms. The aim is to reduce the risk of scam tokens entering India’s crypto ecosystem that may cause financial damage to the investor and trader communities.
The self-regulatory guidelines are based on the PEC framework, that focusses on investor protection, market efficiency as well as credibility and safeguards. A total of 36 Web3 firms that are BWA members have provided suggestions for the formulation of these guidelines. The BWA has bifurcated these guidelines into two parts – Essential Metrics and Indexed Metrics.
Under Essential Metrics, the guidelines suggest that all crypto exchanges must become the primary screening process. To do so, the exchanges have been directed to establish minimum standards to review tokens that are in the pipeline to be listed for public engagement.
Exchanges have been asked to check if the tokens up for listing or the project linked to them – fall under India’s regulatory guidelines and are not linked to potentially dangerous projects. On the technological aspect, the exchanges have been asked to feasibly collect and analyse all information required around these tokens to comply with relevant laws and utilise blockchain analytics tools through third party experts/vendors.
“These guidelines reflect our commitment to ensuring a fair, transparent, and secure ecosystem for virtual digital assets (VDAs). By standardising the listing process, we aim to build awareness amongst stakeholders around token listing, enhance market confidence, protect investors, and foster sustainable growth in the Web3 domain,” Dilip Chenoy, Chairman of BWA said in a prepared statement.
As part of the second classification of BWA’s guidelines – or Indexed Metrics – exchanges have been asked to create their own filtering framework for token listing. Under this process, the exchanges will need to check the white papers, project roadmaps, and technological aspects linked to newer tokens. In order to avoid debacles like the FTX collapse, exchanges have also been suggested to check the liquidity measured by order book across major international platforms.
In addition, crypto exchanges operating in India have been asked to officially announce the date prior to the listing of tokens – making the community aware officially.
“VDA platforms should have operational frameworks and protocols as part of the token listing process once a token passes all checks These may include comprehensive, voluntary disclosures, safeguarding against insider trading, technical assessments before listing, as well as thorough staging and testing before public offering,” BWA noted.
In India, the government has gradually been deploying regulations to safeguard the crypto sector against financial risks. In the most recent development, all crypto exchanges operating within the Indian territory have been mandated to register with the Financial Intelligence Unit (FIU).
Source:gadget360.com