Ever since the Reserve Bank of India (RBI) forbade banks from dealing in cryptocurrency, many cryptocurrency exchanges, like Zebpay, Unocoin, CoinSecure, BuyUcoin and BTCX India, have been seriously considering to move their head offices to jurisdictions outside India. As a matter of fact, many bitcoin exchanges have already approached their advisers and are working on various tax structures.
Most cryptocurrency exchanges are are considering to shift to countries like Singapore, Delaware or Belarus. On Friday, the RBI asked banks to refrain from providing any services to individuals or business entities dealing with or settling virtual currencies. The announcement provoked the crypto investors to sell their cryptocurrencies.
Most cryptocurrency exchanges believe that RBI’s announcement could bring a painful death to the cryptocurrency business in India, and therefore, they should shift before it’s too late.
Shivam Thakral, CEO, BuyUcoin, a cryptocurrency wallet and exchange said,
“We have to move our company to some foreign country where regulations allow opening of bank accounts plus we won’t be dealing in fiat currency. It will become a global operation rather than an India centric operation,”
For the caution, these cryptocurrency exchanges are looking to settle the accounts of their existing customers before they shut down operations in the country and cause a huge loss to these cryptocurrency exchanges. The exchanges hope that if they move their headquarters to another safer place, some of the Indian laws won’t apply to them.
Riaz Thingna, director, Grant Thornton Advisory, said
“Even after such a move, Indian investors may be able to continue to invest with the platforms through innovative structures. Volumes from India will surely go down but profits from business originating from India may escape tax in India as the exchanges would not have a permanent establishment in India after the move,”
To our surprise it’s not just RBI who has been cracking down on the cryptocurrency exchanges.
- The enforcement directorate, income-tax department and the indirect tax authorities have been causing troubles.
- The I-T department has issued notices to about 5 lakh investors. ET reported in December that the indirect tax department had launched an investigation into Bitcoin exchanges in India to ascertain the GST rate that can be levied on them.
- The sales tax department and VAT authorities launched an investigation on the taxability of Bitcoins in the last financial year.
Sidharth Sogani, founder, Block Next Solutions, a block chain consultancy that helps individuals and companies to invest in cryptocurrencies, said,
“Most of the Indian cryptocurrency exchanges have their offshore company in Singapore and the US. They (bitcoin companies) have to move overseas but you can still access their website as well as their exchanges and do crypto to crypto trade,”
Now the exchanges are also exploring how they could introduce different products where they could attract Indian customers to buy cryptocurrency even after they move base to other countries.
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