Policy To Monetise NFTs

NFTs and their marketplaces are fast democratizing the production and exchange of digital assets. Non-fungible tokens have enabled independent developers, artists, entrepreneurs, and companies to seamlessly access vast and burgeoning global markets for various digital assets, driving inclusive economic growth.

Essentially, NFTs can represent any form of digital file, whether that's a jpeg of a piece of art, a video, or even real estate. Turning these files into 'tokens' and securing them on a blockchain make buying, selling and trading these files efficient and reduce fraud.

An NFT is a unique digital code stored on a blockchain, a form of distributed or digital ledger. In simpler terms, the NFTs are digital representations of ownership that are recorded on a blockchain. An NFT could be representing a digital or physical asset which has value. As the markets for NFTs continue to grow, we’re going to see the creation of more platforms to showcase them and manage transactions.

As per market data tracker DappRadar data analytics, the sales of NFTs reached $25 billion in 2021 backed by the crypto asset surge and rising interest of celebrities and tech evangelists across the world. Considering India's digital growth story, the country is well positioned to become the front runner in the NFT space. At present, there are about 11 NFT companies headquartered in India, after the United States, and Singapore.

India is a powerhouse of creativity, rising talent, and young population. The NFTs provide immense opportunity to utilise this potential, and simultaneously the much-needed reach for artists/ originators to digitally showcase their work to a much larger audience.

Both the NFTs and cryptocurrencies are built on blockchain technology, and while cryptocurrency is fungible wherein one bitcoin is the same as any other bitcoin (like the cash in a wallet), the NFTs are ‘non-fungible’ and one piece cannot be exchanged for another.

Web3 is expected to be the biggest technology transformation of the Internet over the next decade. This will be a major employment generation opportunity for the Indian software, digital and allied sectors. The NFTs will be the commerce backbone of Web3, and it is imperative to have supporting policies around this.

As per Indiatech.org, the NFTs are more like IPs and copyrighted products, and this distinction needs to be drawn. Hence the need for the NFTs to be looked at and treated differently in taxation similar to how an IP or a copyright would be treated. This will generate employment, bring into India business, and also harness digital creativity which in turn will boost the government's Digital India mission.