The UAE authorities aim to make Dubai a hub for the blockchain industry through a loyal environment for crypto businesses. Other jurisdictions, such as India and Singapore, also help to make this happen by tightening policies on cryptocurrency companies.
The UAE’s efforts to become one of the most digital-friendly countries are picking up speed. Dubai prepares to issue licenses to some of the biggest international cryptocurrency companies, including Binance, FTX Europe, Crypto.com, and Bybit. And the co-founders of Indian crypto exchange WazirX, Nischal Shetty and Siddharth Menon, have already shifted their headquarters to Dubai from India. This was reported by Business Today. The move comes amid a tougher policy in India regarding crypto taxation.
The Reserve Bank of India declared its concerns about the cryptocurrency market late last year, calling on the government to ban cryptocurrency transactions in the country. The initiative was not approved, but officials remained worried about the impact of cryptocurrencies on the country’s financial stability.
This was followed by India’s passage of a bill to impose a 30% tax on income from digital assets in late March of this year, which was aimed at providing a legal basis for launching the digital rupee. This was the very thing that forced major cryptocurrency exchanges to flee the country and caused a drop in trading volume. Besides, on July 1, the Tax Deducted at Source (TDS) law will come into effect in India, requiring its citizens to pay an additional 1% tax on all transactions. This Indian policy of taxing cryptocurrencies pushes local exchanges to move their operations to Dubai.
At the end of 2021, the Dubai government announced the formation of a cryptocurrency ecosystem, and in February this year, Dubai began developing a regulatory framework for virtual assets. In addition, a new regulatory body, the Dubai Virtual Assets Regulatory Authority (VARA), was created. In May 2022, VARA became the first regulator headquartered in the metaverse.
This commitment to the UAE’s virtual economy starkly contrasts with the more cautious approaches of some Western regulators. It has been a significant factor in moving the crypto business to Dubai. For example, Bybit announced in March of this year that it was moving its head office from Singapore to Dubai, Crypto.com launched a recruitment campaign in the Emirates, and Binance announced plans to establish its regional headquarters in Dubai. Even Binance CEO Changpeng Zhao has moved to Dubai, deeming the city the most crypto-friendly.
