The UAE's push to become a leader in blockchain technology has piqued the interest of crypto firms looking to set up shop there. As a result, recent reports claim that Indian crypto firms are considering the move.
A mass migration?
According to a recent report from the UAE news agency Khaleej Times, several Indian blockchain startups are considering relocating to the Middle East country. As policies surrounding India's nascent market become more restrictive, companies are looking for more conducive environments, with the UAE at the top of their list.
The "Indian crypto community intends to grow its imprint in the Middle East as Dubai is at the forefront of crypto-related activity," according to Indian crypto expert, Jitendra Kale, according to the Khaleej Times. According to the article, at least three crypto businesses, including trading and exchange platforms DigitX, CGCX, and PCEX, are relocating to Dubai.
The UAE has fast developed to become a go-to location for crypto enthusiasts, extending its concept of adopting rules to promote the ease of doing business in the crypto area. At the moment, Abu Dhabi and Dubai are spearheading the charge to become the UAE the world's crypto capital; both cities have wasted no time in issuing licenses to crypto companies such as Binance, FTX, and Bybit.
Dubai also has a zero-tax policy on personal income, in addition to clear restrictions. In response to Dubai's request, Kale stated:
"Dubai has been encouraging the growth of the crypto sector by creating a regulatory environment to attract crypto businesses and talent to the city. Additionally, Dubai has no personal income tax. There is zero tax on any gains, including gains on Cryptocurrency. It also means there is no need for extensive record keeping and filing. Entrepreneurs say it has advantages such as networking opportunities, no restrictions on innovation, access to global opportunities, and resources that outweigh the cost of living in Dubai.”
The reduced tax rules in Dubai, according to Kale, make investment and expansion simpler. Notably, Indian crypto companies are not the only ones interested in expanding to the Middle East. Three Arrows Capital, a Singapore-based crypto venture capital firm, is apparently planning to relocate to Dubai, even as Binance, the world's largest exchange, is said to be establishing its headquarters there.
Indian companies have expressed a willingness to build in India again if regulations improve.
Despite India's current crypto-related rules, crypto entrepreneurs beginning operations in Dubai have shown a willingness to expand their businesses around the Indian market if regulations become less restrictive. Ashish Mehta, co-founder of DigitX, said:
“what cryptoprenuers are trying at this point in time is to make good use of the greener pastures which lie in outside markets today but very soon those exercises will turn out to be capacity development and capacity utilisation experiments and the bedrock of this crypto revolution will be laid back in India eventually as the government comes up with much more comprehensive and supportive regulations for our industry.”
In India, the crypto sector is being hampered by an unjustified capital gains tax policy and KYC procedures. As a result, trading activity on the market has decreased significantly.