Shalini Nagarajan

Bessie Liu

<div id="highlights-block_62bcbc8b6d6e0" class="highlights">
 <ul>
 <li>“A favorable tax regime, supportive legislation, access to capital and a wealth of talent makes Dubai the Web3 hotspot of the future,” a crypto exec told Blockworks</li>
 <li>“India has battled brain drain for decades,” CoinSwitch’s CEO said</li>
 </ul>
 
</div>



India’s <a href="https://cms.blockworks.co/india-clarifies-crypto-taxes-as-trading-volumes-crater/" target="_blank" rel="noreferrer noopener">daunting cryptocurrency taxation</a> policies and seemingly complex treatment of digital assets are pushing local exchanges to Dubai and Singapore.



The nation recently announced a <a href="https://cms.blockworks.co/indias-crypto-tax-takes-effect-with-industry-fearing-it-will-stifle-growth/" target="_blank" rel="noreferrer noopener">1% tax deducted at source</a> (TDS) — meaning crypto users must pay 1% tax on any transaction — on top of a controversial <a href="https://cms.blockworks.co/indias-crypto-tax-takes-effect-with-industry-fearing-it-will-stifle-growth/" target="_blank" rel="noreferrer noopener">30% tax</a> on investment profits.



India’s 30% tax law, which came into effect on April 1, triggered trade volumes at four regional crypto exchanges — WazirX, ZebPay, CoinDCK and BitBns — to immediately <a href="https://www.coindesk.com/business/2022/04/11/crypto-trading-volumes-in-india-collapse-10-days-after-new-taxes-crebaco" target="_blank" rel="noreferrer noopener">crash</a> as much as 72%.



Moves like these have led to India’s central bank being labeled “hostile” to the cryptocurrency sector. Its governor Shaktikanta Das has <a href="https://www.moneycontrol.com/news/business/rbi-governor-interview-citing-crypto-crash-shaktikanta-das-says-rbi-has-been-rightly-cautioning-investors-8559491.html" target="_blank" rel="noreferrer noopener">cautioned against cryptocurrencies</a> and claimed they hold no underlying value.&nbsp;



Nischal Shetty and Siddharth Menon, co-founders of WazirX, have now reportedly shifted operations to Dubai, although they still plan on doing business out of Mumbai.&nbsp;



The Binance Labs-backed exchange told <a href="https://www.businesstoday.in/crypto/story/exclusive-wazirx-ceo-nischal-shetty-co-founder-siddharth-menon-shift-base-to-dubai-330395-2022-04-19" target="_blank" rel="noreferrer noopener">Business Today</a> it is a remote-first organization with employees in over 70 locations. Sameer Mhatre, the third co-founder, continues to head the exchange in India.



Coinbase Ventures-backed Vauld, which recently <a href="https://cms.blockworks.co/coinbase-backed-vauld-cuts-workforce-by-30-seeks-to-halve-exec-pay/" target="_blank" rel="noreferrer noopener">cut</a> its workforce by 30%, shifted its headquarters to Singapore in 2018 alongside ZebPay. CoinDCX is also registered there under the legal name Primestack Pte. Ltd.



“India has battled brain drain for decades. This is a generational opportunity to reset the odds in our favor,” said Ashish Singhal, co-founder and CEO of Bangalore-based CoinSwitch.



CoinSwitch itself isn’t being enticed to move operations away from the country. “We want to play an active role in shaping the Web3 ecosystem in India,” he said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Examples from the US and other matured economies show institutional investors are ready to put capital in crypto markets if there is more regulatory clarity.”</blockquote>



While the new taxation in India appears restrictive and discouraging to investors, Dubai has a <a href="https://news.bitcoin.com/dubai-launching-crypto-valley-tax-free-zone/" target="_blank" rel="noreferrer noopener">full exemption</a> on cryptocurrency taxes — similar to its <a href="https://tradingeconomics.com/united-arab-emirates/personal-income-tax-rate#:~:text=The%20Personal%20Income%20Tax%20Rate,source%3A%20Ministry%20of%20Finance" target="_blank" rel="noreferrer noopener">treatment</a> of personal income.&nbsp;



The emirate’s crypto regulator, the Virtual Assets Regulatory Authority, began handing out crypto exchange licenses in March, and two months later Dubai announced its <a href="https://dlp.dubai.gov.ae/Legislation%20Reference/2022/Law%20No.%20(4)%20of%202022%20Regulating%20Virtual%20Assets.html" target="_blank" rel="noreferrer noopener">first law</a> regulating digital assets.



“There’s a unified regulator workflow, which synthesizes the regulations and creates a beacon for the UAE to become a leader in the digital asset space,” Pranav Sharma, founding partner of Woodstock Fund, told Blockworks. “Taxation rules are also on the individual side.”



<h3 class="wp-block-heading">Global companies look to Dubai and Singapore</h3>



It’s not just India’s crypto exchanges making the move. A raft of global companies are now preparing to launch in Dubai, including Binance, FTX Europe, Crypto.com and Bybit — even though Dubai-based crypto exchanges can only offer a limited number of products and services to pre-qualified investors and professional finance service providers throughout the first phase of its “test, adapt, and scale” framework.



“Dubai is set to become the largest blockchain hub globally,” Domenik Maier, CEO of Dubai-based crypto market maker iBLOXX, told Blockworks. “A favorable tax regime, supportive legislation, access to capital and a wealth of talent makes Dubai the Web3 hotspot of the future.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the UAE’s position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors. <a href="https://t.co/LuNtuIW8FM">pic.twitter.com/LuNtuIW8FM</a>&mdash; HH Sheikh Mohammed (@HHShkMohd) <a href="https://twitter.com/HHShkMohd/status/1501566703322513408?ref_src=twsrc%5Etfw">March 9, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Singapore’s laws, too, are permissive for cryptocurrencies, where the purchase of digital assets isn’t considered taxable, and so capital gains <a href="https://cointelegraph.com/news/why-singapore-is-one-of-the-most-crypto-friendly-countries" target="_blank" rel="noreferrer noopener">aren’t taxable.</a>



Eric Barbier, founder and CEO of TripleA a company that allows businesses to pay and get paid in crypto says Singapore is “an efficient place to run a global business from.”



“I have been building companies in Singapore since the early 2000s because of its strong [intellectual property] laws, pro-business environment and international connectivity,” Barbier told Blockworks.&nbsp;



TripleA recently became one of the first crypto companies to be licensed by Singapore’s Central Bank, a process that took 18 months. Barbier believes that his company was able to receive regulatory approval as it ran by a business-to-business model, which made it “easier to enforce stringent regulatory and compliance standards.”&nbsp;



“Conducting a comprehensive verification process on a business is much easier than on a consumer or on an individual,” Barbier said.



Despite being headquartered in Singapore, Barbier says he has not completely ruled out the possibility of moving to Dubai.



“We are definitely not closing the doors to this possibility. At the moment, though, we are running a global business from Singapore and Europe,” he said. “It is imperative to have in place proper regulatory frameworks and good systems, which will ensure that we are not used as a vehicle for money laundering or terrorism financing in any way.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.

India’s Tax Regime Prompts Crypto Companies To Leave

Jacquelyn Melinek

<div id="highlights-block_60d5f35feab8b" class="highlights">
 <ul>
 <li>ZebPay is using distributed ledger technology (DLT) to enable traditionally marginalized, vulnerable, and disenfranchised communities and help them participate in the global economy and attain financial security, said Maria Shaikh, co-founder of ZebPay’s DAO.</li>
 <li>The average daily traded volume across the top four Indian cryptocurrency exchanges, ZebPay, WazirX, CoinDCX and BitBNS, was about $22.4 million in mid-December 2020, up 398% from about $4.5 million in March 2020, according to data from CoinGecko. </li>
 </ul>
 
</div>



India&#8217;s digital assets industry has been going through a <a href="https://cms.blockworks.co/indias-muddy-stance-on-bitcoin-causes-confusion/" target="_blank" rel="noreferrer noopener">heavy transition period</a> since cryptocurrency trading was officially re-legalized in the country in March of 2020, and ZebPay, one of the country’s <a href="https://www.moneycontrol.com/news/trends/most-popular-cryptocurrency-exchanges-in-india-check-out-6921311.html" target="_blank" rel="noreferrer noopener">most popular crypto</a> trading platforms, is hoping to level the gender playing field by creating the world’s first female-led decentralized autonomous organization (DAO) in India.



Founded in 2014, ZebPay, has over 3 million users globally and $2 billion in fiat transactions on its platform, the Singapore-based company said.&nbsp;



<h3 class="wp-block-heading">What’s a DAO?</h3>



In simple terms, DAOs are governing technologies that allow people to coordinate and self-govern on a secure blockchain network, the company said. A DAO dilutes centralized control of organizations and distributes governance power to its people by using majority voting rules on platforms.



After relaunching in India during March 2020, ZebPay’s DAO hopes to give underrepresented women in blockchain a voice, while increasing their role in decision making and visibility in the technology industry, said Maria Shaikh, data scientist and co-founder of ZebPay’s DAO, who is based in Mumbai, India.&nbsp;



“It&#8217;s both a proof of concept for a blockchain program and an experiential process in the issue of gender inequality,” Shaikh said.&nbsp;



From November 2020 to March, the number of women in India that own a cryptocurrency on CoinDCX exchange<a href="https://www.statista.com/statistics/1223466/cryptocurrency-penetration-gender-india/" target="_blank" rel="noreferrer noopener"> increased from 15% to 20%</a> while the male ownership went from 85% to 80%, according to a Statista study.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="736" height="532" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-25-at-9.34.46-AM.jpg" alt="" class="wp-image-5140" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-25-at-9.34.46-AM.jpg?w=736 736w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-25-at-9.34.46-AM.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-25-at-9.34.46-AM.jpg?w=356 356w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-25-at-9.34.46-AM.jpg?w=361 361w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-25-at-9.34.46-AM.jpg?w=303 303w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/Screen-Shot-2021-06-25-at-9.34.46-AM.jpg?w=80 80w" sizes="(max-width: 736px) 100vw, 736px" /><figcaption>The number of men vs. women in India that own a cryptocurrency on CoinDCX; Source: Statistica</figcaption></figure>



This means about 1 in 5 customers on the platform are female but ZebPay’s organization hopes to reduce the male-to-female crypto investor ratio significantly and give Indian women greater visibility in the technology industry, Shaikh said.&nbsp;



“Although we’ve seen a steady rise in female investors entering the crypto market&#8230;the number of women remains far lower than their male counterparts,” Shaikh said.&nbsp;



<h3 class="wp-block-heading">‘Just the beginning’&nbsp;</h3>



While there are many companies that help organizations create DAOs on its platforms, like Ethereum’s model or dxDAO, having the first female-led DAO is “just the beginning,” for the future of the technology and the blockchain revolution, said Kajal Dalai, full stack developer and co-founder of ZebPay’s DAO, who is also based in Mumbai, India.&nbsp;



“Non-fungible tokens have very quickly reached wild popularity, we believe the next phase will be DAOs,” Dalai said.&nbsp;



ZebPay uses Aragon, a platform for building and running DAOs, which has created over 1,700 DAOs and has about <a href="https://aragon.org/" target="_blank" rel="noreferrer noopener">$900 million</a> assets under management.&nbsp;



The company also uses distributed ledger technology (DLT) to enable traditionally marginalized, vulnerable, and disenfranchised communities and help them participate in the global economy and attain financial security, Shaikh said.&nbsp;



As more people realize the massive potential of blockchain and the focused empowerment of the individual that it brings, the industry will continue to see the space reach new heights, said Dalai. Cryptocurrencies combine the elements of finance, law and technology, but DAO’s go further by adding human organizations to the list, Dalai said.&nbsp;



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="512" height="426" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/06/unnamed-1.jpg" alt="ZebPay's DAO team" class="wp-image-5141" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/06/unnamed-1.jpg?w=512 512w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/unnamed-1.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/unnamed-1.jpg?w=309 309w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/unnamed-1.jpg?w=314 314w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/unnamed-1.jpg?w=263 263w, https://blockworks-co.imgix.net/wp-content/uploads/2021/06/unnamed-1.jpg?w=80 80w" sizes="(max-width: 512px) 100vw, 512px" /><figcaption>The team at ZebPay&#8217;s DAO
</figcaption></figure>



Right now, Indian millennials have recognized the generational opportunities that come with crypto and as a result, Indian crypto exchanges have seen exponential month-on-month growth in trading volume, Shaikh said.&nbsp;



The average daily traded volume across the top four Indian cryptocurrency exchanges, ZebPay, WazirX, CoinDCX and BitBNS, was about $22.4 million in mid-December 2020, up 398% from about $4.5 million in March 2020, according to <a href="https://www.coingecko.com/en" target="_blank" rel="noreferrer noopener">data</a> from CoinGecko.&nbsp;



Although cryptocurrency in India is deemed completely legal, people will realize that adopting cryptocurrencies can mean more than just a quick buck and it can liberate people with cutting-edge technology, Shaikh said.&nbsp;



There needs to be equity through representation and bringing cryptocurrency to those who are likely to benefit the most, like women or rural Indians without bank accounts, who are historically underrepresented in technology and crypto fields, Shaikh said.&nbsp;&nbsp;



“We are not aiming to remove men entirely from the process, but provide a platform where women hold the governance keys,” Dalai said. While the future is promising, there is still work to be done, she said.&nbsp;

Zebpay