India’s unclear stance on virtual assets and regressive tax policies are forcing its cryptocurrency trading platforms to shift to friendlier countries.
Nischal Shetty and Siddharth Menon, the co-founders of cryptocurrency exchange WazirX, have moved to Dubai with their families, the Indian Express reported today. Firms like ZebPay and Vauld have moved to Singapore, while CoinDCX now has a Singapore arm.
The recent global cryptocurrency crash, along with stringent rules and regulatory tweaks in India, has hit the industry that peaked in November 2021.
Many such platforms have now paused operations related to payments, deposits, and withdrawals.
“We are in a bear market right now…many people who are building crypto and Web 3.0 products are moving to jurisdictions with more policy clarity,” the Indian Express quoted an unnamed top executive of one such exchange.
Why Dubai and Singapore?
In August 2021, India ranked second in terms of cryptocurrency adoption, according to blockchain data platform Chainalysis. However, that was not enough.
The country taxes up to 30% on earnings from crypto-asset transactions and transfers of non-fungible tokens. It also deducts 1% as tax at the source of income above 10,000 rupees ($127). Gifts in crypto and digital assets are also taxed.
There are no such taxes in Dubai. A 5% value-added tax aside, earnings from digital properties are almost tax-free. The city has emerged as a hotspot for crypto investments for these reasons.
Singapore doesn’t levy any tax on crypto purchases either. However, it does consider the intent of purchase to determine the tax treatment.