India-based crypto exchange ZebPay is now looking for licenses in Singapore and the United Arab Emirates on the back of its home country’s taxation policies.
The outgoing Chief Executive Officer of the crypto exchange told Bloomberg that the 1% transaction tax India has put on cryptocurrencies this year is affecting trading volumes.
New crypto exchange regulations impact business
While the company will keep its presence in the Indian market, CEO Avinash Shekhar is of the view that the tax “has to come down. Otherwise, things are not going to improve.”
That said, the executive has reportedly decided to continue serving as an advisor to ZebPay while launching his own Web3 business from Singapore or Dubai.
Meanwhile, the startup has imposed pay cuts, with non-management employees seeing a 6% decrease in pay in the current business environment.
ZebPay is not alone in cutting costs. Be[In]Crypto reported this week that WazirX, a prominent Indian cryptocurrency exchange, reduced its workforce by 40%, affecting 40–70 out of the 150 workers at the company.
According to a 2022 Chainalysis report, India, which had the world’s second-largest crypto-loving population, has seen its ranking in crypto adoption fall to fourth place year-on-year.
A recent KuCoin survey estimated that India has around 115 million crypto investors holding or trading crypto in the past six months. Additionally, trading volumes have decreased as a result of Finance Minister Nirmala Sitharaman’s proposal in her budget address for the fiscal year beginning April 2022 to impose a 30% tax on all cryptocurrency gains. With that, a further 1% tax due at the source on all cryptocurrency transfers above a specific threshold has put pressure on the sector since its implementation in July.
Why are businesses headed to Dubai and Singapore?
Dubai and Singapore are locking horns to become the most attractive destination for crypto developers and investors. Both regions have handed out several licenses to allow crypto businesses to operate legally, competing with Asia’s highly taxed crypto counterpart.
Earlier in March, Polygon’s CEO Sandeep Nailwal stated that India’s ambivalence toward cryptocurrencies is scaring away talent, investors, and business owners and could continue to lead to a ‘brain drain’ in the sector in the coming years.
Nailwal also moved base from India to Dubai over two years back.
In the latest migrations, co-founders of Indian crypto exchange WazirX, Nishal Shetty and Siddharth Menon, reportedly moved to Dubai. Troubled crypto company Vauld had also made a move to Singapore.
This is happening while India is yet to announce a crypto bill that is expected to bring clarity over crypto treatment for its different use cases.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.