In a time when the crypto industry has been experiencing severe volatility, it’s no wonder that India would be one of those countries most affected. With tightening regulations on digital assets, which includes action from enforcement agencies, the industry has been unable to catch a break.
The industry is bearing the brunt of new rules and regulatory measures that have caused many professionals to worry over the policy’s lack of clarity. The recent shift in the crypto industry has caused several startups to close their doors and move abroad.
Recently, it has been reported that many cryptocurrency companies have chosen to relocate out of India due partly to unclear regulatory measures. It is said that close 30-50 such firms moved their base into Dubai or Singapore because these nations have more welcoming regulations regarding cryptocurrencies while still remaining true enough for business needs without restrictiveness.
Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that shows the UAE’s position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors. pic.twitter.com/LuNtuIW8FM
— HH Sheikh Mohammed (@HHShkMohd) March 9, 2022
It seems that the crypto revolution has hit India hard. The Co-founders of WazirX, India’s largest cryptocurrency exchange, have moved their families to Dubai this year. In contrast, Sandeep Nailwal, polygon’s cofounder, also moved to Dubai over the last two years, with some others, such as ZebPay, moving onto Singapore too.
In Search Of More Welcoming Administration
The recent shift in India’s cryptocurrency industry has many people seeking a more welcoming and positive authority. For instance, ZebPay was responsible for processing most of the country’s transactions before shutting down its operations and moving to Singapore.
The company was left with no choice but to move out of India because its jurisdiction is so strict. In a move to regulate and ban cryptocurrency transactions, the Reserve Bank Of India (RBI) announced that all banks are banned from performing business with digital asset platforms starting in 2018 itself.
In 2020, the Polygon exchange became another victim of political pressure and closed its operations in the country. They moved their business elsewhere – this time to Dubai, where they currently reside.
Top industry management in India is leaving because they can’t stand living under such regressive regulations, which have made things very unclear for them even to date.
What’s Making Crypto Companies Leave India?
The Indian government continues to be unclear about how it will approach cryptocurrency, leaving many investors in a state of constant anxiety. The country had allowed the industry to grow and bolster its scope, but in July 2018, it started a ban on bank transactions for crypto companies. This caused many hassles as they needed to secure bank accounts from banks for their businesses. The government’s decision to withdraw its 2018 order a year later was an example of erratic behavior.
Heavy taxation has been a significant concern for both investors and companies, with the Finance Ministry recently levying a 30% tax on income from cryptocurrencies.
The tax rules say that investors cannot deduct the cost of transactions, interest on loans, or any other expenses during their calculation period. Additionally, the limit for a Basic Income Exemption of Rs 2.5 lakh is not applicable when it comes to cryptocurrency income, which means you could get taxed at higher rates instead.
From July 1, all payments towards crypto and virtual digital assets beyond Rs 10,000 will be liable to attract 1% TDS which exchanges shall deduct. Virtual digital assets (VDA) in the form of gifts are also subject to taxation.
The government has imposed a shadow ban on cryptocurrencies, which means that some companies cannot offer their services there for fear of being shut down or entirely outlawed by local authorities sooner than expected. For instance, Coinbase launched recently but was prohibited from letting users add money through the United Payment Interface (UPI) system.
The crypto brain drain is finally being felt as a result of this unfortunate incident. Coinbase and other exchanges were forced to stop their services because they could not operate well in India, which in turn led to the downfall of what was once considered an exciting industry with great potential for growth ahead.