Trade between India and the UAE has increased to $85 billion last yearBoth countries are exploring interoperability between central bank digital currencies (CBDCs) projects.
India topped Chainalogy Global Cryptocurrency Adoption Index In 2023, it is now the second largest cryptocurrency market in the world by transaction volume. But the local industry, which has been drying up due to strict tax rules imposed by the government, is inspiring local players to look for the oasis of Dubai’s thriving cryptocurrency ecosystem.
The Burj Khalifa skyscraper (center) among other commercial buildings in Dubai, United Arab Emirates, on Friday, November 18, 2022. Image: Bloomberg
“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 feel more comfortable in a jurisdiction where there are no last-minute surprises,” said Sumit Gupta, CEO of Bursa. Indian Cryptocurrency CoinDCX: “I’m starting to see this trend in action and it needs to be reversed.”.
“We have seen a decline (in volume) of more than 90 percent. This is a significant and steep decline. India is still number one when it comes to adoption of cryptocurrencies at the grassroots level, but a lot of this activity is happening on alternative channels due to lower rates,” Gupta said. High taxes.
A bitcoin trading company in Bangalore on November 23, 2021. Photo: AFP
Finance Minister Nirmala Sitharaman last year introduced a 30 per cent tax on top of applicable surcharges and a 4 per cent tax on cryptocurrency trading profits.
This year brought more bad news for Indian traders with the imposition of a 1 per cent tax deducted at source (TDS) on cryptocurrency transactions worth more than Rs 10,000. F Willingness to pay TDS This could result in a penalty equal to the unpaid amount, 15 percent interest on late payments, and even jail time.
“Regulatory arbitrage” may not be around for much longer, Gupta said. The Indian Ministry of Finance did not respond to an interview request or provide a comment for this article.
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“The arbitrage will not last for long, it has to go away. The government is aware of this. It is a question of when they decide to remove this arbitrage. Servicing Indian customers from abroad is not scalable, unreliable and incompatible,” Gupta said.
Low taxes, ease of setting up companies, dedicated regulatory bodies and access to international markets like Asia and Europe are driving the wave of Indian cryptocurrency companies towards Dubai.
Cryptocurrency projects can meet the rest of the world via Dubai. “New companies (from) the UK, India, China, US and Russia make up the top 5 percent,” Bilal Jasuma, head of business development at the Dubai Multi Commodities Center (DMCC), said at the Future Blockchain Summit. “Dubai is basically a hub.”
One in 10 companies in its dedicated crypto hub is Indian. DMCC Crypto Centre I welcomed the Solana Foundation As its ecosystem partner at the Future Blockchain Summit and includes a long list of Web3 companies including cryptocurrency exchange Bybit, digital asset market maker DWF Labs, Web3 incubator TDeFi, and venture capital fund Brinc.
The city’s designated digital asset regulatory body, the Virtual Assets Regulatory Authority ( Fara), oversees cryptocurrencies and related activities in all free zones in Dubai except the Dubai International Financial Center (DIFC). Abu Dhabi has a similar scope of work through the Abu Dhabi Global Market (ADGM).
“VARA has formulated its regulations to be adaptable to market requirements and flexible in addressing global market risks, with the aim of attracting entrepreneurs to establish Dubai as a central hub for Web3,” said Sunita Khatri, Commercial Director, Dubai World Trade Centre. ).
The United Arab Emirates is located within the Middle East and North Africa region. according to String analysisThe region has the sixth largest cryptocurrency-based economy with an estimated value of US$400 billion or 7.2 percent of the global transaction volume recorded between July 2022 and June 2023.
“The MENA region as a region represents an interesting opportunity for CoinDCX to tap into as it is a fast-growing market, the adoption numbers there are impressive and Web3 can open up many opportunities in the Indo-UAE corridor. New use cases related to remittances and payments,” Gupta said. It appears from that area.”
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“BitOasis was a strategic investment approach by CoinDCX to make an impact in international markets, perhaps not directly, but by partnering with the right companies that align with our mission and values,” the company said.
India is not alone in tightening restrictions on cryptocurrencies. Australia’s progress on regulations has been slow. The country is With the aim of issuing a draft law in 2024 Licensing and Custody of Australian Crypto Asset Providers and Cryptocurrency Exchanges May Not Be Licensed Until 2025.
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Commonwealth Bank (CBA) and other Australian lenders restricted Cryptocurrency exchanges, citing “scams” as the reason. As a result of the cancellation of banking services, Binance Australia was forced to halt customer deposits and withdrawals.
“We have always been an Australia-only exchange, but with the difficulties and challenges, we are now actively looking to expand overseas,” said Caroline Bowler, CEO of BTC Markets.
“Dubai has gone into something very personalized and very specific,” she said. “They are looking to build this sector for the long term.”
An undated photo of Binance founder Zhao Changpeng, also known as CZ, wearing an Emirati abaya, the traditional dress of the UAE. Photo: @Changpengzhao/Instagram
Binance recently Obtained an operating license in Dubai, and opened the services of the world’s largest cryptocurrency exchange to customers in Dubai. Cryptocurrency exchanges Gemini and Bybit are also seeking a license in the UAE.
US based Coinbase’s Brian Armstrong discussed with the UAE The regulatory bodies plan to establish a second market access headquarters in the Middle East and North Africa region. Coinbase suspended operations in India three days after its launch in April 2022 due to issues with the Coinbase platform. Local digital payment service. Informal pressure from India’s central bank has been cited as a factor. The exchange is still not active in India, but its wallet services and technology center are still active.
Ripple’s XRP recently received approval from the Dubai Financial Services Authority (DFSA) for use in the Dubai International Financial Center (DIFC). Virtual asset companies licensed in the DIFC can now offer XRP as part of their services.
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Ripple CEO Brad Garlinghouse He said: “Dubai continues to demonstrate global leadership (in) regulating virtual assets and fostering innovation… Ripple will continue to redouble its efforts in Dubai, and we look forward to continuing to work closely with regulators to realize the full potential of cryptocurrencies.”
“The regulatory climate in the US has been relatively hostile or unclear for digital asset companies, so exchanges like Coinbase and other major players have announced they will be applying for licenses here,” said CEO Jimmy Nguyen. New Win International, a Web3 project consulting firm. “Dubai has been progressive in creating regulatory clarity with the launch of VARA, setting guidelines and policies around licenses to obtain. So (global) exchanges and other digital asset service providers are setting up a second headquarters.
Nexo The UK-based cryptocurrency bank is expanding its operations in the UAE, aiming to reach 30 percent of its global presence. The move comes in the wake of US sanctions on the cryptocurrency lending product, with Nexo paying US$45 million in settlements.
