Web3 Ecosystem Investment Continues To Thrive Despite Policy Hurdles
New Delhi [India], July 10: Regulatory clarity surrounding crypto, Web3, and the blockchain are starting to arrive in major jurisdictions like the United States. The specter of regulatory clarity has had a positive impact on crypto adoption, valuations and investment into the ecosystem.
The economic upside from regulatory clarity goes beyond just the value of the cryptocurrency asset class. With clear-cut regulations, the full economic potential of the Web3 ecosystem could be unleashed. However, while jurisdictions on the verge of regulatory clarity may be gearing up for such a moment, for now, in India, regulatory clarity appears to still be on hold.
Although a recent order from India’s Supreme Court suggests more rapid action ahead on the part of regulators, it remains to be seen whether policy hurdles will soon be resolved. Still, despite a continued lack of action when it comes to establishing and harmonizing crypto regulation, the Web3 industry in India continues to thrive.
India’s Web3 Sector is Thriving, but Still Hindered by Regulatory Opacity
To say there is untapped potential in the Indian Web3 market is an understatement. Per the 2024 Hashed Emergent India Web3 Landscape Report, India’s share of the global Web3 developer community has increased by 140% over the past decade, going from 5% of global Web3 developers to 12%.
In terms of Web3 investment, this has increased by an even greater margin, over a much shorter period of time. In 2024, investments into Indian Web3 projects increased by a whopping 224%. Still, while Indian Web3 is indeed thriving, with growing investment and a growing talent base of young, hungry, Gen-Z developers passionate about building up this nascent industry, it’s clear that the space is operating well below its full potential.
Some of crypto’s biggest leaders are continuing to push Web3 development and adoption in India. After the recent Binance Blockchain Yatra 2025 event, Binance CEO Richard Teng posted on X, ”Binance Blockchain Yatra is a great step towards accelerating Web3 adoption across India. I’m proud to see Binance championing innovation and community engagement through this initiative, empowering the next generation of blockchain builders. Let’s build the future of Web3 together.”
While crypto giants like Biannce continue to support India’s Web3 ecosystem development, the countries crypto regulations are still lagging behind innovation causing institutional investor hesitancy.
The Push for Regulatory Progress
As also discussed in the aforementioned India Web3 Landscape Report, while regulatory opacity remains, the Indian Web3 industry is pushing for change. Industry leaders have put together a five-point policy change proposal, hoping to convince Indian policymakers to implement a new, clear, pro-growth regulatory regime for crypto, the blockchain, and Web3.
Firstly, the plan calls for the Indian government to develop and implement a regulatory framework for virtual asset service providers (VASPs), citing how regulatory frameworks in place for traditional finance are “ill-suited for regulating Web3.” Second, the wishlist calls for reforms to how India taxes crypto, including a repeal of crypto withholding tax obligations.
Third, the policy change wishlist calls for streamlined banking and payment access. As it stands now, traditional banking firms, due to a lack of regulatory clarity, are hesitant to provide banking and payment services to Web3 companies. Along with these key policy reform points, the five-point plan also calls for Indian policymakers to clarify existing regulations, as well as explicitly establish what types of business are and are not subject to VASP regulations.
What This Means for Indian Web3 Moving Forward
The Indian Web3 industry has put in the effort, and is fighting the good fight, in terms of pushing for much-needed reforms to India’s crypto and Web3 regulatory regime. That said, even if these particular efforts fail to make an impact, other factors at play could accelerate the path towards regulatory clarity.
In other major Web3 markets like the United States, policymakers are making rapid progress with finalizing their regulatory frameworks for the industry. Once these are fully implemented, nations competing for dominance in the Web3 economy (like India) may by then be more compelled to harmonize their regulatory regimes in line with global standards, eliminating rules and regulations that hinder growth.
Also, another ongoing event, the integration of AI agents into Web3, could change the game for numerous verticals within the Web3 ecosystem, including DeFi and Web3 gaming. As this translates into increased user penetration, this may also compel policymakers in India to fast-track policy changes necessary for the country’s Web3 sector to reach its full potential.
(Disclaimer: This is a syndicated feed. The article is not edited by the FPJ editorial team.)
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