Crypto exchanges are leaving India due to a 90% decline in business, but they intend to come back

January 18, 2024

By Anjali Kochhar

WazirX peaked as India’s largest cryptocurrency trading platform in 2022, with a $43 billion turnover, in just four years since its founding. However, the corporation had a 90% decline in revenue the following year, bringing in just $4 billion.

Both businesses are among many that have suffered from high taxes levied on cryptocurrency holdings by the Indian government in 2022. These days, many companies are compelled to relocate their operations overseas, primarily to Dubai.

The Center decided 2022 to levy a 30 percent tax on all earnings and a 1 percent tax deducted at source on the transfer of crypto assets that fall under the virtual digital asset (VDA) category and have a value of more than Rs 50,000.

The Reserve Bank of India has long stated that bitcoin assets threaten macroeconomic and financial stability and have no inherent value; therefore, it has also been cautious about cryptocurrency trading.

WazirX was founded in 2018 and made cryptocurrency trading available to Indians utilizing its unique peer-to-peer technology, which facilitated faster and easier cryptocurrency conversion. Before long, thousands of people traded millions of dollars daily in cryptocurrencies.

ThePrint was informed by Rajagopal Menon, vice-president of WazirX, that the company’s turnover in 2022 and 2023 saw a sharp decline. “That took the Indian crypto scene by storm and helped us become India’s largest crypto exchange,” Menon said.

WazirX decided to relocate some of its activities to Dubai due to the high taxation and unpredictability surrounding regulations, even though the company is still based in Mumbai.

Industry participants anticipate a policy change in the forthcoming Union Budget in February that will let these enterprises return home, even as they leave.

“We’re hopeful that the budget will cover at least some of it. “The world is based on hope, and cryptocurrency is no different,” Menon told The Print.

In addition to taxes, Menon pointed out that cryptocurrency companies are reconsidering doing business in India because of the RBI’s doubtful position on platforms like Bitcoin and Ethereum.

According to him, banks have been “nervous” about cooperating with cryptocurrency exchange firms because the RBI is still cautious about cryptocurrencies. To purchase Bitcoin, a steady connection between a bank account and a crypto trading account is required.

It is challenging to conduct business here due to the lack of convenience of doing so.

Even though there is a lot of ambiguity in India, Dubai appears to be supporting bitcoin, as evidenced by its clear rules and lack of taxes. This has drawn some of the largest cryptocurrency exchange companies from India, helping Dubai fulfill its goal of being the “financial capital of the Middle East.”

The Dubai Virtual Asset Regulatory Authority (VARA) oversees the cryptocurrency industry there, giving firms much-needed security. Additionally, bitcoin gains and assets are tax-free in the United Arab Emirates.

Menon stated, “Dubai is drawing these individuals to attract more talent, businesses, and investments, which will ultimately generate revenue and a thriving ecosystem.” “They are extending the red carpet.”

In response to unclear regulations, Edul Patel, the CEO and co-founder of Mudrex, has moved the company to the US while keeping its headquarters in India.

After launching in 2018, Patel told ThePrint that Mudrex raised over $22 million and added almost a million users to its platform. However, due to regulatory compliance, sales decreased by nearly 90 percent.

In such a scenario, bitcoin companies have shifted their attention away from India. He said, “Some companies are expanding to Dubai because it is a wealthy region with many assets, but they still exist and work in India.”

About the author

Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.

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