BWA Unveils Guidelines for Safe Web3 Practices
The Bharat Web3 Association (BWA) has taken a significant step towards enhancing the security and integrity of the Web3 ecosystem in India. This non-governmental organization, which includes various industry stakeholders, has introduced comprehensive guidelines aimed at promoting safe business practices for Virtual Asset Service Providers (VASPs). Chaired by former FICCI Secretary General Dilip Chenoy, the BWA’s initiative seeks to ensure that Web3 service providers operate transparently and ethically. The guidelines were unveiled this week and are designed to align with both Indian regulations and international best practices.
Emphasis on Fair Trading Practices
On January 7, the BWA released its “Cybersecurity and Fair-Trading Guidelines.” These guidelines are crucial for VASPs, as they emphasize the need for ethical and transparent operations. The BWA aims to integrate robust risk management solutions to enhance financial safeguards for investors in India. VASPs have until June 2025 to comply with these guidelines.
The BWA has made it clear that VASPs must remain vigilant against unethical trading practices and market manipulation. The organization has curated these directives to protect traders and ensure their financial safety. One of the key highlights of the Fair-Trading Guidelines is the requirement for VASPs to provide transparent information about asset listings, market prices, and trading rules. This transparency is essential for building trust within the investor community.
Additionally, VASPs are instructed to implement measures to detect and prevent activities such as wash trading, insider trading, and pump-and-dump schemes. The BWA also encourages its members to educate investors on safe trading practices. Another critical aspect of the guidelines is the restriction of unauthorized employees from accessing sensitive information related to user orders or trades. The practice of ‘front-running,’ where an entity uses insider knowledge to execute trades ahead of others, is explicitly prohibited.
Strengthening Cybersecurity Measures
The BWA’s Cybersecurity Guidelines are equally important in today’s digital landscape, where hacks and scams are on the rise. These guidelines are designed to help VASPs protect their integrity, security, and confidentiality. The BWA emphasizes the need for VASPs to educate users about secure practices while ensuring compliance with cybersecurity standards.
The guidelines detail BWA-approved security testing practices for asset custody services and exchange platforms. They also focus on safe customer data protection practices, which include educating the investor community about market dos and don’ts. By implementing these measures, VASPs can enhance their security posture and build confidence among users.
The BWA’s proactive approach to cybersecurity is essential for fostering a secure environment for Web3 services. As the industry continues to evolve, these guidelines will serve as a foundation for VASPs to operate securely and responsibly.
The Regulatory Landscape in India
While the BWA is taking steps to self-regulate, the Indian government has yet to finalize specific laws governing the Web3 sector. According to Minister of State (MoS) Finance Pankaj Chaudhary, there is currently no set timeline for establishing these regulations. In India, cryptocurrency gains are taxed at 30 percent, and crypto firms must register with the Financial Intelligence Unit (FIU) and comply with anti-money laundering regulations. Additionally, all exchanges are required to collect Know Your Customer (KYC) details from their users.
Amid ongoing discussions about formal crypto regulations, the BWA has been proactive in implementing self-regulatory measures for its member firms. In December last year, the BWA announced a new ‘ABCD’ initiative focused on Web3 security. Earlier, in April 2024, the BWA laid down self-regulatory rules regarding token listings for exchanges. These initiatives reflect the BWA’s commitment to fostering a secure and compliant Web3 environment in India.
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