Crypto gaming is a type of gaming in which users can earn cryptocurrency by playing online skill games like poker, rummy, fantasy, and ludo. The idea behind gaming using crypto assets is that users can earn an asset that has the potential to grow in value over time.
Players in traditional gaming can only own items such as XP, avatars, weapons, and boosts within the game. All rights to these are retained by the player while they are a part of the game and are owned by the game’s developers as a whole. Since the assets are owned by the developers, they cannot be transferred from one game to another, and players must always start from scratch when they begin another game.
By utilising blockchain technology, crypto gaming has revolutionised this gaming model for gamers. Players can now use their rewards and items across multiple crypto gaming projects, and the items acquired while playing a game are owned by the user.
Since such games are developed on blockchain networks, all the connected computers have access to the same amount of information across the crypto gaming universe. This has levelled the playing field of control between the players and the creators. This raises the stakes for the players and provides additional incentives for them to devote more time to a particular game because the rewards can be used elsewhere.
Current Crypto Gaming Regulations
Currently, India’s regulations state that cryptocurrency is neither prohibited nor considered an asset. The most recent regulations have been the tax implications for cryptocurrency.
The government has imposed a 30% tax on digital assets, which will be applicable to crypto as of April 1, 2022. The newly introduced law applies to all in-app purchases and reward points offered by crypto gaming apps. In addition, the government has proposed levying a 1% Tax Deducted at Source (TDS) on virtual digital asset transactions. Furthermore, TDS would be charged on in-app purchases and rewards from crypto gaming apps, with the burden of paying that tax falling on the gamers, resulting in lower income for them.
The issue is the ambiguity surrounding the levying of TDS for in-app purchases of gaming assets in crypto games. For complete clarity regarding taxes in crypto gaming, an in-depth layout of the law would be required. Users are unsure whether the tax will be applied each time they purchase a specific asset or as a one-time charge.
If properly implemented, the regulations can have a significant positive impact in the following ways:
More Jobs: Legal registrations in India would assist in the establishment of many companies that are currently operating from all over the world while doing business in India. This would create a spike in employment in this sector.
More Revenue For The Country: Regulating and taxing sports betting will generate thousands of crores of rupees in revenue for the country, boosting the economy and eliminating the need for a black market in the first place.
Safer: Having companies registered in India allows authorities to track and ensure that everything is above board. From deposits to cashouts, all transactions can be tracked to ensure that no scams are taking place. We see a lot of scams where users have difficulty withdrawing funds or personal information is cloned to gain access to credit/debit card details. Users’ trust in the sector would automatically increase because they would have a place to direct their complaints.
Correct Regulation: If regulations are enacted and gaming companies are able to legitimise themselves by applying for licenses and paying taxes, there will need to be a crackdown on the other companies operating illegally. The government would need to assure legitimate businesses that it would make every effort to keep illegal operators out.
If this is not done correctly, why would a company apply for a license and pay crores of rupees in taxes when other companies operating at a similar level do not?
Taxation: This is a crucial part that the government needs to get right. High taxation for betting companies will most likely encourage them to continue operating illegally as they do now. Why would they pay the high taxes and expose themselves when they can continue as they are?
The best-case scenario would be for crypto to be recognised as a legitimate form of currency, allowing people to use their crypto assets as a form of payment or bond. The asset can be pegged to the INR to allow for calculated conversions.
The worst-case scenario is that India completely bans crypto. While there have been rumours that the government would consider imposing this, the general consensus is that with the growing crypto market, it may be difficult to completely prohibit crypto gaming.
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Crypto gaming is a type of gaming in which users can earn cryptocurrency by playing online skill games like poker,… ResourcesInc42 Media