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Brain drain: India’s crypto tax forces budding crypto projects to move

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Brain drain: India’s crypto tax forces budding crypto projects to move

India’s 30% crypto tax came into law on March 31 and was effective April 1, despite warnings from several stakeholders about its possible ill impact on the budding crypto industry. 

As predicted, within just a couple of weeks of the new crypto tax law coming into effect, trading volume across major crypto exchanges dropped as much as 90%. The decline in trading activity was attributed to traders either moving their funds away from centralized crypto exchanges or adopting a holding strategy over trading.

Many crypto exchanges were hoping that a crypto tax would at least offer some form of recognition to the crypto ecosystem and help them get easy access to banking services. However, the effect has been the opposite.

On April 7, the National Payment Corporation of India (NPCI) issued a statement claiming they were not aware of any crypto platforms using the Unified Payments Interface (UPI) — the national fiat payment gateway.

While crypto exchanges were not using the UPI directly, they previously partnered with several payment processors with UPI access to facilitate fiat to crypto onboarding. 

This is a common strategy incorporated by several leading crypto platforms around the world. Binance has done it in the United Kingdom, Malaysia and a few other jurisdictions after it was prohibited from directly accessing the national fiat payment gateway in respective countries.

Following the NPCI’s April 7 statement, however, payment service providers — ostensibly from an overabundance of caution toward the government’s hostile stance on crypto — began to sever ties with crypto platforms.

Now, Indian crypto exchanges can’t even find a third-party payment processor despite the newly introduced crypto tax laws. 

This, combined with the draconian tax policy, is causing crypto platforms in the country to consider moving to more crypto favorable jurisdictions, with Dubai being a primary choice. Sathvik Vishwanath, CEO of Indian crypto exchange Unocoin, told Cointelegraph:

“Unfair tax policies in India are making people consider alternative countries like UAE for their new projects. On the other side, people are more likely to consider working for foreign countries to avoid tax confusion. India needs to fix up their taxation laws for the crypto industry.”

The brain drain has begun 

The Indian crypto ecosystem has thrived over the past few years, producing several unicorns despite a lack of regulatory clarity. Many stakeholders of the ecosystem had expressed faith in the government with hopes of getting some clarity soon. However, with the regressive tax laws coming into effect, many crypto platforms are already deciding to move abroad.

A physical cryptocurrency exchange in India. Source: Bitcoin.com

A local crypto educator and expert familiar with the matter who preferred to remain anonymous told Cointelegraph that Polygon, one of India’s leading Ethereum scaling solutions, is looking to shift its base along with Push Token to Dubai. None of these firms responded to the queries of Cointelegraph at the time of publishing.

Pushpendra Singh, a leading crypto entrepreneur and founder of crypto media platform SmartView AI, told Cointelegraph:

“India’s dithering on whether to embrace digital assets is causing thousands of developers, YouTubers, startups, investors and traders to leave for places with more friendly regulation countries like Dubai or El Salvador. According to a recent report, the Dubai DMCC Free Zone has said 16% of the new company registrations recorded in Q1 of 2022 were crypto and blockchain companies. Millions of young talented Indians from various disciplines have left Indian soil in search of better opportunities. Most countries are encouraging Web3, metaverse and blockchain development.”

The Indian government has failed to submit a draft crypto bill despite assurance on the same since 2018. At the same time, it has hurriedly formulated new crypto tax laws within two months that are heavily inspired by the country’s gambling and betting laws. The government has failed to take input from stakeholders in the crypto ecosystem and the disastrous impact is for everyone to see within the first month.

In March, Polygon co-founder Sandeep Nailwal warned about the possible crypto brain drain scenario. He said at the time that the Indian government’s approach toward crypto would certainly lead to a crazy brain drain situation:

“I want to live in India and promote the Web3 ecosystem. But, overall, the way the regulatory uncertainty is there and how big Polygon has become, it doesn’t make sense for us or for any team to expose their protocols to local risks.”

Crypto exchange WazirX founder Nischal Shetty, who has reportedly shifted his base to Dubai, shared similar concerns with Cointelegraph:

“The challenges that crypto investors are facing today can lead to an array of disadvantages for the entire system. It can also lead to traders transacting on peer-to-peer exchanges instead of the Indian exchanges that are Know Your Customer compliant. It will also result in the government losing out on tax revenues. Under such unfavorable circumstances, we will see more and more startups in crypto and Web3 move abroad. We must stop this brain drain by bringing in more conducive and concrete policies that will help us make it in India.”

Is there a solution?

The Indian central bank is currently the biggest advocate for a blanket ban on crypto use while many ministers in the current regime have demanded a higher crypto tax, citing its use for illicit activities. Looking at the current stance of the government and ministry in charge of formulating crypto regulations, there is little hope of a change of stance and by the time the government realizes the harm it has inflicted with its policies. The majority of Indian crypto platforms may have already moved.

A major concern for Indian ministers seems to be the use of crypto for illicit activities. However, that notion has been debunked several times over the years and the latest report from Chainalysis indicates crypto use for illegal activities has gone down to less than 1% of the total circulation supply.

The need of the hour is a formidable crypto framework and the government can take inspiration from its Asian counterparts such as Thailand and Malaysia. Thailand scrapped its early proposal of a 15% crypto tax on capital gains and also exempted traders from value-added taxes on regulated exchanges to promote the use of crypto. The Indian government will have to act fast to undo the damage. Otherwise, it will be a spectator in the Web3 race.

Mohammed Danish, chief legal officer at crypto exchange BitDrive, concluded, “While India is leading from the front in producing some exceptionally talented builders in the Web3 space who are adding great value to the industry worldwide, it has miserably failed to provide a conducive atmosphere for the Web3 projects to operate from India due to its ambiguous regulatory policy regarding the activities involving the use of crypto.” 

“The recent move to cut off retail payments for crypto exchanges is a fresh example that caused the trading volumes to tumble to as low as 90% on some of the platforms. There is no legal justification to deny payments access to the exchanges. Such unexpected and unwarranted actions are also pushing Web3 projects to shift their base to more comfortable jurisdictions like Dubai, Singapore, Portugal and others. There is an urgent need for the government to take corrective measures to stop this brain drain in the best interest.”

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Korean Police Ask Crypto Exchanges to Freeze Luna Foundation Guard’s Assets

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Korean Police Ask Crypto Exchanges to Freeze Luna Foundation Guard’s Assets

Korean Police Ask Crypto Exchanges to Freeze Luna Foundation Guard's Assets

The South Korean police have reportedly launched an investigation into possible embezzlement involving an employee of Terraform Labs. To prevent fund transfers, the police have requested crypto exchanges to freeze the Luna Foundation Guard’s accounts.

Embezzlement Investigation and Asset Freeze

The Seoul Metropolitan Police Agency’s Cybercrime ​​Investigation Unit announced Monday that it has launched an investigation into possible embezzlement by an employee of Terraform Labs, local media reported.

An official from the Seoul Metropolitan Police Agency was quoted by Chosun as saying:

We have received information that there is a person suspected of embezzling corporate funds who is believed to be an employee of Terraform Labs.

The police received reports of the alleged embezzlement in the middle of this month and have been looking into the case. As part of the investigation, the police plan to check the details of cash and crypto transactions of Terraform Labs and the Luna Foundation Guard (LFG).

The police explained that there is evidence that embezzled funds had flowed into the Luna Foundation Guard’s accounts. The cybercrime unit has therefore requested major domestic cryptocurrency exchanges, such as Upbit and Bithumb, to “urgently” freeze the accounts belonging to the Luna Foundation Guard to prevent withdrawals of funds held at crypto exchanges.

However, the police’s freeze request is not a compulsory matter according to Korean laws and regulations but a matter that needs to be arbitrarily performed by each crypto exchange. Therefore, it has not been confirmed whether the freeze requests have been carried out, the publication conveyed.

Cryptocurrency terra (LUNA) and stablecoin terrausd (UST) collapsed earlier this month after UST lost its peg to the U.S. dollar.

Following the collapse, the Korean government launched an emergency investigation into the two coins and met with representatives of the country’s top crypto exchanges to discuss measures to prevent similar incidents from happening.

Last week, a number of victims filed a lawsuit against Terraform Labs CEO Kwon Do-hyung (aka Do Kwon) with the Seoul Southern District Prosecutors Office on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud) and the Act on the Regulation of Similar Receipts.

In addition, Do Kwon dissolved Terraform Labs Korea days before the collapse of LUNA and UST. While many suspected foul play, Kwon claimed that the timing was just “coincidental.” He also claims that his company does not owe the Korean government any taxes.

What do you think about this case? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Registration For The Upcoming VERSE Token By Bitcoin․com Is Now Open

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Registration For The Upcoming VERSE Token By Bitcoin․com Is Now Open

press release

Registrations are now open for the VERSE token sale, which will begin in the later part of June 2022. Interested parties who register can participate in the token sale immediately upon launch.

Miami, Florida – May 23rd, 2022 – VERSE is the rewards and utility token distributed to holders who participate in the Bitcoin.com ecosystem. Bitcoin.com is a global leader in introducing newcomers to cryptocurrency and is the go-to platform for educational resources, news, and more. Bitcoin.com’s ecosystem includes 30 million wallets and more than five million monthly active users across various products and services.

The VERSE token will reward users who engage in buying, selling, spending, swapping, and staying informed about cryptocurrency. Rewards will be allocated by interacting with the Verse DEX, staking VERSE, cashback paid in VERSE, and using VERSE as collateral in various lending pools. Additionally, token holders will receive access to exclusive products and services.

VERSE is a cross-chain token using the ERC-20 token standard on the Ethereum blockchain. The Verse team will actively explore opportunities to expand the token into low-fee Ethereum Virtual Machine-compatible networks to provide an optimal user experience.

The VERSE supply is fixed at 210 billion tokens, distributed over seven years through a block-to-block approach. A further breakdown looks as follows:

  • 10% sold during Sale A (completed in May 2022)
  • 6% being sold during Sale B (coming in June 2022)
  • 15% allocated to the team
  • 35% set aside for ecosystem incentives
  • 34% will be used for funding future development of Verse and its ecosystem

The first token sale raised $33.6 million last month from notable market participants such as Blockchain.com, KuCoin, and Digital Strategies along with thought leaders like Roger Ver, Jihan Wu, and David Wachsman.

“We were honored to see such outspoken support during our first token sale round. Furthermore, we could not be more excited about bringing our second token sale to the public and providing more people with access to VERSE. This new utility token marks a crucial milestone for the Bitcoin.com ecosystem. It will enable us to enhance the mainstream appeal of cryptocurrency and blockchain through our buy/sell services, news coverage, and educational tools” said Dennis Jarvis, CEO Bitcoin.com.

To participate in the upcoming VERSE token sale, interested parties need to register on the Verse website. They will be the first to know when the VERSE token sale is live.

Registrants need an Ethereum wallet – such as the Bitcoin.com Wallet – to receive the VERSE tokens. Payment for the token sale is possible with Bitcoin, Bitcoin Cash, Ethereum, USDT, and USDC.

The Verse community already counts over twenty-five thousand participants combined across Telegram and Discord. VERSE tokens will be minted following the conclusion of the Verse public sale in July.

The VERSE token sale is not available to U.S. purchasers.

Bitcoin.com

Bitcoin.com is your premier source for everything Bitcoin-related. We can help you buy bitcoins and choose a bitcoin wallet. You can also read the latest news, or engage with the community on our Bitcoin Forum. Please keep in mind that this is a commercial website that lists wallets, exchanges and other Bitcoin-related companies.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Popular Radio Presenter Suspended for Alleged Ties to Bitcoin Scam

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Popular Radio Presenter Suspended for Alleged Ties to Bitcoin Scam

South Africa’s national broadcaster has suspended one of its employees that is accused of convincing unsuspecting people, including pensioners, to invest in a cryptocurrency scam. More than 100 people are believed to have fallen victim to promises of very high returns to investors in the bitcoin investment scheme.

300% Return on Investment

The South African state broadcaster recently suspended one of its radio presenters, Sebasa Mogale, after a media exposé suggested he may have been part of a cryptocurrency scam outfit that reportedly promised a 300% return on investment.

The decision to suspend the popular broadcaster, who also plays a role in South Africa’s popular television series Skeem Saam, was made after an investigative report by the media outlet Carte Blanche identified him as one of the masterminds behind the scam that allegedly fleeced more than 100 people.

Reports of Mogale’s suspension were confirmed by Gugu Ntuli, the South African Broadcasting Corporation (SABC) group executive responsible for corporate affairs and marketing. In a statement, the executive said:

Thobela FM has taken a decision to unschedule Sebasa Mogale, (Ntshirogele) Afternoon Drive presenter, following the Carte Blanche exposé. Mr Mogale is being afforded an opportunity to resolve the issues raised in the recent broadcast which pertain to his personal business dealings involving cryptocurrency.

Ntuli added that the SABC will “leave no stone unturned” in its own probe into Mogale’s role in the scam.

A Confidence Trickster

According to an exposé by Carte Blanche, Mogale had used his celebrity status to lure some listeners of his radio show to invest. The media outlet’s report said investors with no training in personal finance management had “cashed in their pensions and savings policies.” However, in the end, Mogale’s promises turned out to be empty.

“But for at least 140 people the man they trusted to guide them through the crypto maze appears to have been little more than a confidence trickster,” reads part of Carte Blanche’s summary of the exposé.

Following news of Mogale’s suspension, some of the victims of the scam have come forward to reveal their losses. Sello Bonoko is quoted in another report explaining he became a victim after he listened to Mogale’s bitcoin investment pitch that “sounded convincing.” He also said he trusted Mogale’s promises primarily because these were made on national radio. Bonoko said he lost more than $14,500 (R230,000).

Meanwhile, a spokesman for the South African police is quoted in the report telling Mogale’s victims to file reports with law enforcement. He said the police can only act after formally receiving the complaints.

What are your thoughts on this story? Tell us what you think in the comments section below.

Terence Zimwara

Terence Zimwara is a Zimbabwe award-winning journalist, author and writer. He has written extensively about the economic troubles of some African countries as well as how digital currencies can provide Africans with an escape route.

Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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