Seeking refuge from stringent regulations at home, an increasing number of Indian crypto companies are making the move to Dubai, enticed by the welcoming regulatory landscape of the United Arab Emirates (UAE). This migration is a direct reaction to India’s rigid tax policies and the uncertain legal framework surrounding digital currencies.
The 2021 RBI Remittance Survey disclosed that India’s expatriate community in the UAE contributes a substantial 18% to the nation’s $110 billion global remittance inflow.
UAE Embraces Relocating Indian Crypto Entities
This connection extends to the blockchain and web3 sectors, indicating a strong financial tie between the two nations. Trade between India and the UAE reached $85 billion last year, underscoring the increasing importance of their economic relationship.
A significant factor driving Indian crypto companies towards Dubai is the marked disparity in regulatory environments. Sumit Gupta, CEO of CoinDCX, voiced his concerns, stating,
“Many Web3 founders prefer Dubai or Singapore as their hub because of the clarity and certainty around regulations and greater community support.”
Recently, the Indian government imposed a 30% tax on profits from cryptocurrency trading, coupled with a 1% tax deducted at source on transactions exceeding 10,000 rupees. These updated regulations have led to a sharp decline in the local crypto market.
“India remains at the forefront of grassroots cryptocurrency adoption, but a significant portion of this activity is shifting to alternative channels due to high tax rates.”
Dubai Emerging as a Flourishing Crypto Hub
On the contrary, Dubai offers low taxes, streamlined business setup processes, and a dedicated regulatory framework for digital assets, making it an appealing destination for crypto firms. The Dubai Multi Commodities Centre (DMCC), a major commercial hub, hosts over 23,000 companies, with a substantial portion originating from India.
Belal Jassoma, head of business development at DMCC, highlighted Dubai’s role as a global hub, attracting diverse international businesses.
This shift aligns with the broader crypto trend, where regions like the Middle East and North Africa (MENA) are emerging as significant players. The MENA region recorded a substantial $400 billion in cryptocurrency transactions, underscoring its growing importance in the digital currency realm.
Indian cryptocurrency firms will continue to grapple with regulatory challenges, while Dubai’s progressive stance and strategic global positioning provide a viable alternative. The emirate also nurtures a conducive environment for the growth and innovation of the crypto industry.
Publish 8 Jan 2024
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