The Bharat Web3 Association (BWA), which along with the Government of India regulates the crypto industry and ensures safe participation, has laid down some rules for service providers in the crypto industry to follow. The Web3 industry group has released guidelines that cryptocurrency exchanges should follow when considering listing new altcoins on their platforms. The aim is to reduce the risk of scam tokens entering the Indian crypto ecosystem, which could cause financial losses to the investor and trader community.

The self-regulatory code is based on the PEC framework and focuses on investor protection, market efficiency, and credibility and safeguards. A total of 36 BWA member Web3 companies provided input into the development of these guidelines. BWA divides these guidelines into two parts – basic indicators and index indicators.

Based on fundamental indicators, the guidelines recommend that all cryptocurrency exchanges must undergo a primary screening process. To this end, exchanges have been directed to establish minimum standards for scrutinizing tokens being listed for public participation.

Exchanges have been asked to check whether tokens to be listed or projects related to them comply with India’s regulatory guidelines and are not related to potentially dangerous projects. On the technical side, exchanges are required to effectively collect and analyze all information required for these tokens to comply with relevant laws and utilize blockchain analysis tools through third-party experts/vendors.

“These guidelines reflect our commitment to ensuring a fair, transparent and secure ecosystem for Virtual Digital Assets (VDA). By standardizing the listing process, we aim to increase stakeholder awareness of token listings, enhance market confidence, and protect investors and promote sustainable growth in the Web3 space,” BWA Chairman Dilip Chenoy said in a prepared statement.

As part of the second category of the BWA guidelines, known as index metrics, exchanges are required to create their own filtering framework for token listings. During this process, exchanges will need to examine the white paper, project roadmap, and technical aspects related to the new token. To avoid a disaster like the FTX crash, exchanges are also advised to check liquidity as measured by order books on major international platforms.

Additionally, cryptocurrency exchanges operating in India have been asked to officially announce the date before listing the token to let the community officially know.

“Once a token has passed all checks, the VDA platform should develop operating frameworks and protocols as part of the token listing process. These checks may include comprehensive, voluntary disclosures, protection against insider trading, pre-listing technical assessments, and public offerings Thorough phasing and testing beforehand,” BWA noted.

In India, the government is gradually deploying regulations to protect the crypto industry from financial risks. In the latest development, all cryptocurrency exchanges operating within India will be required to register with the Financial Intelligence Unit (FIU).