The crypto companies are relocating to Dubai and Singapore in search of a more favorable industry and supportive infrastructure.
The Great Indian Crypto Brain Drain
The crypto industry in India is suffering. The country’s central bank, the RBI, had already maintained a very cautious approach to digital assets, at times bordering on being hostile. On top of that, the recently levied 30% crypto tax has throttled the industry even more. Moreover, the 1% TDS per transaction has been the cherry on top of the anti-crypto cake. The last rule has particularly affected market liquidity as frequent traders have had to cut down on their transaction frequencies to reduce losses. Therefore many such companies have been slowly wrapping up their India operations and opting to migrate to more crypto-friendly locations like Dubai and Singapore.
Indian Companies Reach Dubai
The new crypto tax law came into effect on April 1, 2022, and resulted in the plummeting trading volumes of India-based crypto exchanges like WazirX, ZebPay, CoinDCX, and BitBns. RBI governor Shaktikanta Guha’s warning against cryptocurrencies also did not help the already struggling market. Amidst all the FUD surrounding the industry in India, one of the exchanges to make the move is WazirX. Two of the co-founders of this crypto exchange, Nischal Shetty and Siddharth Menon, have reportedly shifted operations to Dubai, while the third co-founder, Sameer Mhatre, continues to head India operations.
The founding partner of Woodstock Fund, Pranav Sharma, believes,
“There’s a unified regulator workflow, which synthesizes the regulations and creates a beacon for the UAE to become a leader in the digital asset space. Taxation rules are also on the individual side.”
Dubai’s 0% taxation and supportive infrastructure make it one of the prime crypto hubs of the world. Plus, crypto exchanges can easily acquire operational licenses under the Emirate’s Virtual Assets Regulatory Authority (VARA).
Singapore Also Drawing In India’s Crypto Firms
Singapore is another location that is attracting Indian crypto companies. The purchase of digital assets is not taxable, according to Singaporean law. The zero capital gains taxes makes this island country a prime crypto location. Indian-origin crypto exchanges Vauld and ZebPay had shifted their headquarters to Singapore in 2018, long before the taxation was imposed. India’s first crypto unicorn, CoinDCX, has also launched a branch in Singapore under the registered name Primestack Pte. Ltd.
Interestingly, Bangalore-based crypto exchange Coinswitch is one of the few that have chosen to stay. Its co-founder and CEO, Ashish Singhal, wants to lead the country’s Web3 movement and has commented,
“India has battled brain drain for decades. This is a generational opportunity to reset the odds in our favor. We want to play an active role in shaping the Web3 ecosystem in India.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.