Indian Crypto Companies Migrate to Dubai Amidst Regulatory Shifts

A New Era in Crypto Regulations

In a recent development, Indian cryptocurrency firms are relocating to Dubai, drawn by the more favourable regulatory landscape of the United Arab Emirates (UAE). This move is primarily a reaction to the stringent tax rules and ambiguous legal guidelines for digital currencies in India. This shift reflects the changing dynamics in the global crypto landscape, with Dubai emerging as a new hub for digital currency enterprises.

India's Remittance Influence

The RBI Remittance Survey 2021 highlighted that Indian expatriates in the UAE contribute a notable 18% to India's impressive $110 billion global remittance inflow. This financial connection is now extending into the realms of blockchain and web3 sectors, further strengthening the economic ties between India and the UAE. The bilateral trade between these nations surged to $85 billion last year, underscoring their deepening economic interdependence.

Regulatory Divergence Drives Migration

The pivotal reason for this migration of Indian crypto firms to Dubai is the stark difference in regulatory approaches. Sumit Gupta, CEO of CoinDCX, voiced his concerns, "A lot of Web3 founders prefer Dubai or Singapore as their hub because they have clarity and certainty around regulations and greater community support."

In contrast, the Indian government's recent imposition of a 30% tax on cryptocurrency trading profits and a 1% tax deducted at source on transactions over 10,000 rupees has led to a noticeable downturn in the local crypto market. Gupta further observed, "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."

Dubai: A Rising Crypto Hub

Dubai is increasingly becoming a favoured destination for crypto firms, offering low taxes, ease of business establishment, and a dedicated framework for digital assets. The Dubai Multi Commodities Centre (DMCC), hosting over 23,000 companies, many from India, exemplifies Dubai's growing role as a crypto hub. Belal Jassoma, head of business development at DMCC, noted Dubai's significance in attracting diverse international businesses.

The broader trend in the crypto world is also shifting, with regions like the Middle East and North Africa (MENA) becoming prominent players. The MENA region witnessed $400 billion in cryptocurrency transactions, marking its rising importance in the digital currency sphere.

Looking Ahead

Despite regulatory challenges, Indian cryptocurrency firms are adapting, with Dubai's progressive stance offering a strategic and supportive alternative. This movement is not just a relocation of businesses but a signifier of the evolving global landscape in the crypto industry.