Indian Crypto Companies Move to Dubai
India's strict policy on cryptocurrency taxation and a seemingly complex approach to digital assets are pushing local exchanges to Dubai and Singapore.
The country recently announced a 1% withholding tax (TDS) - meaning that cryptocurrency users must pay 1% tax on any transaction - on top of the controversial 30% tax on investment profits.
India's 30 percent tax law, which came into force on April 1, led to an immediate drop in trading volumes on four regional crypto exchanges - WazirX, ZebPay, CoinDCK and BitBns - by 72%.
Such actions led to the fact that the central bank of India was called "hostile" towards the cryptocurrency sector. Its governor Shaktikanta Das warned against cryptocurrencies and stated that they do not have a basic value.
It is reported that Nishal Shetty and Siddharth Menon, co-founders of WazirX, have now moved their operations to Dubai, although they still plan to do business outside Mumbai.
The exchange, backed by Binance Labs, told Business Today that it is a remote organization with employees in more than 70 locations. Samir Mkhatre, the third co-founder, continues to lead the exchange in India.
Vauld, a company supported by Coinbase Ventures, which recently reduced its staff by 30%, moved its headquarters to Singapore in 2018 along with ZebPay. CoinDCX is also registered there under the legal name Primestack Pte. LLC
"India has been struggling with brain drain for decades. This is an opportunity for generations to change the odds in our favor," Ashish Singhal, co-founder and CEO of Bangalore-based CoinSwitch, told Blockworks.
CoinSwitch itself is not tempted to move operations out of the country. "We want to play an active role in shaping the Web3 ecosystem in India," he said.
While the new taxation in India seems restrictive and discouraging to investors, Dubai has a full exemption from taxes on cryptocurrency - similar to its approach to personal income.
Global companies are paying attention to Dubai and Singapore
Not only Indian cryptocurrency exchanges are making a move - a number of global companies are preparing to launch in Dubai, including Binance, FTX Europe, Crypto.com and Bybit.
However, Dubai-based crypto exchanges can only offer a limited number of products and services to pre-qualified investors and professional financial service providers at the first stage of their "testing, adaptation and scaling" structure.
"Dubai should become the largest blockchain hub in the world," said Blockworks Domenik Mayer, CEO of Dubai-based cryptocurrency company iBLOXX. "A favorable tax regime, supportive legislation, access to capital and a wealth of talent make Dubai the Web3 hotspot of the future."
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