India's high crypto taxes, announced earlier this year, have resulted in some Indian crypto companies mulling a move to cheaper territories, as firms see declining trade volumes on their platforms, Cointelegraph reports.
The country currently levies a 30% tax on cryptocurrencies, which effectively puts crypto taxes in the same band as gambling taxes that are already among the highest taxes in India.
Many Indian crypto firms are looking to move to the Middle East, where crypto-friendly policies have attracted firms like Binance and Coinbase.
India is home to a booming market of up to 20 million crypto investors, according to Reuters, which says its total crypto virtual assets market is equivalent to approximately 400 billion rupees or $5.37 billion.
India has the highest crypto adoption rate in the world after Vietnam, boasting more than 100 million investors in the space, according to an estimate from Asian crypto fintech firm TripleA. It ranked at the top of Chainalysis’ 2021 Global Crypto Adoption Index.
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But there is evidence high taxes are throttling the industry.
"As of today, crypto and blockchain are now legal and encouraged in the country, but a 30% tax on all cryptocurrency trading hinders the growth," crypto influencer Scott Melker told Cointelegraph. "Following this disastrous tax policy, some exchanges have reported up to a 70% decline in trading activity. For now, it truly seems like India only has an interest in what blockchain can do for the country and not what Bitcoin can do for its citizens.”
The country also set to launch a central bank digital currency (CBDC) later this year, joining 100-odd countries, including the United States, that are looking seriously at the viability of a CBDC.
Despite this, India's central bank has criticized virtual assets for their price volatility and alleged link to "money-laundering" and "terror financing."
New Delhi is working on regulations related to cryptocurrency that would need to be reviewed by India's legislature before passing into law.