Indian Crypto Companies Flock to Dubai to Escape Overbearing Laws at Home

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BeInCrypto2024/01/08 07:23

By:By Kyle Baird 8 January 2024, 07:00 GMT+0000Updated by Kyle Baird 8 January 2024, 07:00 GMT+0000

Indian crypto companies are increasingly relocating to Dubai, spurred by the United Arab Emirates’ (UAE) welcoming regulatory environment. This exodus is a direct response to India’s stringent tax regulations and uncertain legal framework surrounding digital currencies.

The RBI Remittance Survey 2021 revealed that India’s expatriate population in the UAE contributes a significant 18% to the country’s $110 billion global remittance inflow.

UAE Welcomes Migrating Indian Crypto Firms

This interconnection extends into blockchain and web3 sectors, signifying a financial bond between the two countries. Last year, the trade between India and the UAE escalated to $85 billion, highlighting the growing importance of this economic relationship.

One of the major factors driving Indian crypto firms to Dubai is the stark contrast in regulatory environments. Sumit Gupta, CEO of CoinDCX, expressed his concern, stating ,

“A lot of Web3 founders prefer Dubai or Singapore as their hub because they have clarity and certainty around regulations and greater community support.”

The Indian government recently imposed a 30% tax on cryptocurrency trading profits . This was coupled with a 1% tax deducted at source on transactions above 10,000 rupees. These updated rules have caused a steep decline in the local crypto market.

Gupta added,

“India continues to be number one when it comes to grassroots cryptocurrency adoption, but a lot of that activity is happening on alternative channels because of the high tax rates.”

India tops grassroots crypto adoption study. Source: Statista

Dubai Becoming a Blooming Crypto Hub

Dubai, on the other hand, offers low taxes, ease of setting up businesses, and a dedicated regulatory framework for digital assets, making it an attractive destination for crypto firms . The Dubai Multi Commodities Centre (DMCC), a major commercial hub, houses over 23,000 companies, with a significant portion from India.

Belal Jassoma, head of business development at DMCC, remarked on Dubai’s role as a global hub, noting the diverse international businesses it attracts.

The shift also aligns with the broader trend in crypto, where regions like the Middle East and North Africa (MENA) are emerging as key players. The MENA region recorded a substantial $400 billion in cryptocurrency transactions, indicating its growing significance in the digital currency domain.

Indian cryptocurrency firms will continue to navigate these regulatory challenges . Meanwhile, Dubai’s progressive stance and strategic position as a global hub offer a viable alternative. It also fosters a conducive environment for the growth and innovation of the crypto industry.

Read more: The State of Crypto Regulation in India

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