“A lot of Web3 founders prefer Dubai or Singapore as their hub, because they have clarity and certainty around regulations and greater community support. When you’re setting up a business, investors are more comfortable in a jurisdiction where there are no last-minute surprises. I am starting to see this trend on the ground and it must be reversed,” said Sumit Gupta, the chief executive of Indian cryptocurrency exchange CoinDCX.
“We have seen a [volume] decline of more than 90 per cent. That is a huge, steep decline. India continues to be number one when it comes to grass roots cryptocurrency adoption, but a lot of that activity is happening on alternative channels because of the high tax rates,” said Gupta.
Finance Minister Nirmala Sitharaman last year introduced 30 per cent tax plus applicable surcharge and 4 per cent levy on profits from cryptocurrency trading.
The “regulatory arbitrage” may not be around for much longer, Gupta said. The Indian Finance Ministry did not respond to a request for an interview or provide commentary for this article.
Hong Kong’s crypto about-face attracts bank interest from mainland China
Hong Kong’s crypto about-face attracts bank interest from mainland China
“The arbitrage will not sustain for long, and has to go away. The government is aware of that. It’s a matter of when they decide to remove that arbitrage. Serving Indian customers from offshore is not scalable, not reliable and not compliant,” said Gupta.
Low taxes, ease of setting up businesses, a dedicated regulator and access to international markets such as Asia and Europe are driving the wave of Indian cryptocurrency firms towards Dubai.
Cryptocurrency projects can meet the rest of the world through Dubai. “New businesses [from] the UK, India, China, US and Russia make up the top 5 per cent,” said Belal Jassoma, head of business development at the Dubai Multi Commodities Centre (DMCC), at the Future Blockchain Summit. “Dubai is basically a hub.”
“VARA has crafted its regulations to be adaptable to market demands and be agile in addressing global market risks, aiming to attract entrepreneurs to solidify Dubai’s position as a central hub for Web3,” said Sunita Khatri, Commercial Director, Dubai World Trade Centre (DWTC).
“MENA as a region is quite an interesting opportunity for CoinDCX to tap into because it’s a fast growing market, the adoption numbers there are pretty impressive and Web3 can unlock many opportunities in the India-UAE corridor. New use cases around remittances and payments are emerging from that region,” said Gupta.
“BitOasis was a strategic investment approach by CoinDCX to create an impact in international markets, maybe not directly, but by partnering with the right companies who are aligned with our mission and values,” the company said.
“We’ve always been an Australia-only exchange, but with the difficulties and challenges, we’re now actively looking to expand overseas,” said Caroline Bowler, CEO, BTC Markets.
“Dubai [has] gone for something very tailored, very specific,” she said. “They’re looking to build out this sector for the longer term.”
Ripple’s XRP recently received approval from the Dubai Financial Services Authority (DFSA) for use within the Dubai International Financial Centre (DIFC). Licensed virtual asset firms in the DIFC can now offer XRP as part of their services.
Hong Kong digital assets market needs guardrails, investor education: HKMA CEO
Hong Kong digital assets market needs guardrails, investor education: HKMA CEO