Shalini Nagarajan

Bessie Liu

<div id="highlights-block_62bcbc8b6d6e0" class="highlights">
 <ul>
 <li>“A favorable tax regime, supportive legislation, access to capital and a wealth of talent makes Dubai the Web3 hotspot of the future,” a crypto exec told Blockworks</li>
 <li>“India has battled brain drain for decades,” CoinSwitch’s CEO said</li>
 </ul>
 
</div>



India’s <a href="https://cms.blockworks.co/india-clarifies-crypto-taxes-as-trading-volumes-crater/" target="_blank" rel="noreferrer noopener">daunting cryptocurrency taxation</a> policies and seemingly complex treatment of digital assets are pushing local exchanges to Dubai and Singapore.



The nation recently announced a <a href="https://cms.blockworks.co/indias-crypto-tax-takes-effect-with-industry-fearing-it-will-stifle-growth/" target="_blank" rel="noreferrer noopener">1% tax deducted at source</a> (TDS) — meaning crypto users must pay 1% tax on any transaction — on top of a controversial <a href="https://cms.blockworks.co/indias-crypto-tax-takes-effect-with-industry-fearing-it-will-stifle-growth/" target="_blank" rel="noreferrer noopener">30% tax</a> on investment profits.



India’s 30% tax law, which came into effect on April 1, triggered trade volumes at four regional crypto exchanges — WazirX, ZebPay, CoinDCK and BitBns — to immediately <a href="https://www.coindesk.com/business/2022/04/11/crypto-trading-volumes-in-india-collapse-10-days-after-new-taxes-crebaco" target="_blank" rel="noreferrer noopener">crash</a> as much as 72%.



Moves like these have led to India’s central bank being labeled “hostile” to the cryptocurrency sector. Its governor Shaktikanta Das has <a href="https://www.moneycontrol.com/news/business/rbi-governor-interview-citing-crypto-crash-shaktikanta-das-says-rbi-has-been-rightly-cautioning-investors-8559491.html" target="_blank" rel="noreferrer noopener">cautioned against cryptocurrencies</a> and claimed they hold no underlying value.&nbsp;



Nischal Shetty and Siddharth Menon, co-founders of WazirX, have now reportedly shifted operations to Dubai, although they still plan on doing business out of Mumbai.&nbsp;



The Binance Labs-backed exchange told <a href="https://www.businesstoday.in/crypto/story/exclusive-wazirx-ceo-nischal-shetty-co-founder-siddharth-menon-shift-base-to-dubai-330395-2022-04-19" target="_blank" rel="noreferrer noopener">Business Today</a> it is a remote-first organization with employees in over 70 locations. Sameer Mhatre, the third co-founder, continues to head the exchange in India.



Coinbase Ventures-backed Vauld, which recently <a href="https://cms.blockworks.co/coinbase-backed-vauld-cuts-workforce-by-30-seeks-to-halve-exec-pay/" target="_blank" rel="noreferrer noopener">cut</a> its workforce by 30%, shifted its headquarters to Singapore in 2018 alongside ZebPay. CoinDCX is also registered there under the legal name Primestack Pte. Ltd.



“India has battled brain drain for decades. This is a generational opportunity to reset the odds in our favor,” said Ashish Singhal, co-founder and CEO of Bangalore-based CoinSwitch.



CoinSwitch itself isn’t being enticed to move operations away from the country. “We want to play an active role in shaping the Web3 ecosystem in India,” he said.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“Examples from the US and other matured economies show institutional investors are ready to put capital in crypto markets if there is more regulatory clarity.”</blockquote>



While the new taxation in India appears restrictive and discouraging to investors, Dubai has a <a href="https://news.bitcoin.com/dubai-launching-crypto-valley-tax-free-zone/" target="_blank" rel="noreferrer noopener">full exemption</a> on cryptocurrency taxes — similar to its <a href="https://tradingeconomics.com/united-arab-emirates/personal-income-tax-rate#:~:text=The%20Personal%20Income%20Tax%20Rate,source%3A%20Ministry%20of%20Finance" target="_blank" rel="noreferrer noopener">treatment</a> of personal income.&nbsp;



The emirate’s crypto regulator, the Virtual Assets Regulatory Authority, began handing out crypto exchange licenses in March, and two months later Dubai announced its <a href="https://dlp.dubai.gov.ae/Legislation%20Reference/2022/Law%20No.%20(4)%20of%202022%20Regulating%20Virtual%20Assets.html" target="_blank" rel="noreferrer noopener">first law</a> regulating digital assets.



“There’s a unified regulator workflow, which synthesizes the regulations and creates a beacon for the UAE to become a leader in the digital asset space,” Pranav Sharma, founding partner of Woodstock Fund, told Blockworks. “Taxation rules are also on the individual side.”



<h3 class="wp-block-heading">Global companies look to Dubai and Singapore</h3>



It’s not just India’s crypto exchanges making the move. A raft of global companies are now preparing to launch in Dubai, including Binance, FTX Europe, Crypto.com and Bybit — even though Dubai-based crypto exchanges can only offer a limited number of products and services to pre-qualified investors and professional finance service providers throughout the first phase of its “test, adapt, and scale” framework.



“Dubai is set to become the largest blockchain hub globally,” Domenik Maier, CEO of Dubai-based crypto market maker iBLOXX, told Blockworks. “A favorable tax regime, supportive legislation, access to capital and a wealth of talent makes Dubai the Web3 hotspot of the future.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the UAE’s position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors. <a href="https://t.co/LuNtuIW8FM">pic.twitter.com/LuNtuIW8FM</a>&mdash; HH Sheikh Mohammed (@HHShkMohd) <a href="https://twitter.com/HHShkMohd/status/1501566703322513408?ref_src=twsrc%5Etfw">March 9, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Singapore’s laws, too, are permissive for cryptocurrencies, where the purchase of digital assets isn’t considered taxable, and so capital gains <a href="https://cointelegraph.com/news/why-singapore-is-one-of-the-most-crypto-friendly-countries" target="_blank" rel="noreferrer noopener">aren’t taxable.</a>



Eric Barbier, founder and CEO of TripleA a company that allows businesses to pay and get paid in crypto says Singapore is “an efficient place to run a global business from.”



“I have been building companies in Singapore since the early 2000s because of its strong [intellectual property] laws, pro-business environment and international connectivity,” Barbier told Blockworks.&nbsp;



TripleA recently became one of the first crypto companies to be licensed by Singapore’s Central Bank, a process that took 18 months. Barbier believes that his company was able to receive regulatory approval as it ran by a business-to-business model, which made it “easier to enforce stringent regulatory and compliance standards.”&nbsp;



“Conducting a comprehensive verification process on a business is much easier than on a consumer or on an individual,” Barbier said.



Despite being headquartered in Singapore, Barbier says he has not completely ruled out the possibility of moving to Dubai.



“We are definitely not closing the doors to this possibility. At the moment, though, we are running a global business from Singapore and Europe,” he said. “It is imperative to have in place proper regulatory frameworks and good systems, which will ensure that we are not used as a vehicle for money laundering or terrorism financing in any way.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Binance

India’s Tax Regime Prompts Crypto Companies To Leave

Ben Strack

<div id="highlights-block_624716ff21750" class="highlights">
 <ul>
 <li>Lead agent in the 2016 Bitfinex hack investigation joins blockchain intelligence solutions provider</li>
 <li>Chainlink Labs adds the ex-CTO at Diem Association and a former VP at LinkedIn to its leadership ranks</li>
 </ul>
 
</div>



FTX Europe appointed Marcel Lötscher to the company’s newly created head of regulatory strategy role, and he will step into the position on Oct. 1. He will join the company to continue FTX&#8217;s global expansion into Europe and the Middle East.



Lötscher, who holds a doctoral degree in collective investments, is former head of the securities and markets division at the Financial Market Authority (FMA) of Liechtenstein and a member of its executive board.



Patrick Gruhn, head of FTX Europe, highlighted the different regulations across European countries. He told Blockworks that cryptoassets are deemed a financial instrument in Germany, for example, but are treated like commodities in Austria and Switzerland.



“If we have the same rules in all European countries, that makes it easier for crypto firms to sell their product, and at the end of the day, also to be scalable,” Lötscher said.



Crypto lending and borrowing platform Celsius appointed Guillermo Bodnar as its chief technology officer.



Bodnar most recently worked as chief solutions officer at software development company Globant. Before that, he was chief information officer of Arbinet, where he built the largest computer-based telecommunications exchange and trading platform.



Celsius CEO Alex Mashinsky founded Arbinet and worked with Bodnar at the company. He noted in a statement that he and Bodnar will focus on “unlocking financial freedom for the next 100 million crypto users.”



Blockware Mining named Jackie Price as its chief operating officer. She is set to lead the Chicago-based company’s corporate partnerships, government affairs, strategic planning, marketing and investor relations.



Price previously served as chief marketing officer of the Chamber of Digital Commerce, one of the largest digital asset industry trade associations, and was also formerly a senior executive at public relations and marketing consultancy firm Edelman.



Izumi World has named a former marketing executive at Gatorade, Samsung, Verizon, Xbox and Rarible as its chief marketing officer.



Jamie Davies spent more than two decades as director of marketing for Gatorade and Samsung. He was also formerly head of brand and innovation marketing at Verizon and a senior advertising manager at Xbox.



A game in which players capture and train magical beasts called Izumis from live-tracked locations in the real world, <a href="https://www.izumiworld.com/" target="_blank" rel="noreferrer noopener">Izumi World</a> seeks to be a leading augmented reality game in the play-to-earn and traditional gaming spaces. It also plans to launch a non-fungible token (NFT) collection in the second quarter.



Chainlink Labs has added the former chief technology officer at Diem Association and an ex-vice president at LinkedIn to its leadership ranks.&nbsp;



Dahlia Malkhi, who before working at Diem spent about 10 years at Microsoft Research and co-founded VMware Research, has joined the blockchain oracle solutions provider as its chief research officer.



Chainlink Labs also announced this week that Mike Derezin, who spent more than a decade at LinkedIn, joined the company late last year as its chief operating officer.



Pete Stephens has joined digital asset custodian Komainu as its chief technology officer.&nbsp;



He previously served as head of technology for Switzerland’s SIX Digital Exchange. He focused on capital markets post-trade technology in roles at DrumG Technologies, UBS AG, IBM and PwC.



Stephens joins Komainu shortly after its introduction of Komainu Yield and will be responsible for expanding the company’s staking services and the buildout of additional yield generating offerings.



TRM Labs named former IRS-Criminal Investigations (IRS-CI) Special Agent Chris Janczewski as head of global investigations.



Janczewski was the lead agent in the <a href="https://cms.blockworks.co/couple-arrested-as-government-recovers-3-6b-in-stolen-bitcoin/" target="_blank" rel="noreferrer noopener">Bitfinex hack investigation</a> while at IRS-CI, focusing on the alleged conspiracy of two individuals to launder $4.5 billion in cryptocurrency stolen during 2016. He signed a seizure warrant that recovered $3.6 billion in cryptocurrency, the largest seizure in United States government history.



TRM provides blockchain intelligence solutions to help financial institutions, cryptocurrency businesses and public agencies combat crypto-related fraud and financial crime.&nbsp;



Casey Wagner contributed to this story.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

Blockware Mining

The Latest in Crypto Hiring: FTX Names Head of Regulatory Strategy

Macauley Peterson

<div id="highlights-block_62260641d58c4" class="highlights">
 <ul>
 <li>FTX’s global expansion gains regulatory approval with a Europe-wide license</li>
 <li>Founder and CEO Sam Bankman-Fried turned 30-years-old on Sunday and carries a net worth of about $22 billion, Forbes estimates</li>
 </ul>
 
</div>



Global crypto spot and derivatives exchange FTX is bringing its European operations under a new corporate umbrella. FTX Europe will allow the firm’s products and services to cater to European clients via a licensed investment firm overseen by the Cyprus Financial Market Regulator (CySEC), according to a statement released Monday.



Cyprus is a member of the European Union, so licenses granted there are passportable, meaning they apply across the European economic area — which includes Iceland, Liechtenstein and Norway, but excludes Switzerland.



FTX Europe is currently headquartered in Switzerland, the statement notes, but has a regional headquarters in Cyprus, which has been a member of the EU since 2004 and completed entry into the Economic and Monetary Union in 2008.



Head of FTX Europe Patrick Gruhn was previously the chief legal officer for Digital Assets AG, a German company that handled the tokenization process for CM-Equity, a German-based securities bank that helped bring traditional stock trading to FTX customers outside the US.



European customers are currently served by the international FTX.com, but the new operation will allow FTX to align itself more closely with Europe’s regulatory apparatus. Clients who wish to move their accounts over to the new entity may do so, but it will not be mandatory.



&#8220;FTX EU has a different product offering than FTX.com — for example, we do not offer lending currently in Europe,&#8221; Gruhn told Blockworks.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;This is extremely important. Crypto Derivatives are Financial Instruments in many jurisdictions (in Europe they fall under MiFID II), in order to operate in those markets you must have the proper license or you can&#8217;t be active in those markets.&#8220;</blockquote>



MiFID II refers to the <a href="https://www.esma.europa.eu/policy-rules/mifid-ii-and-mifir">Markets in Financial Instruments Directive</a>, which became the law of the land in the EU in November 2007, a key financial market regulation enabling a single market for investment services and activities across Europe.



<h3 class="wp-block-heading">FTX founder enters fourth decade</h3>



Sam Bankman-Fried, who <a href="https://www.forbes.com/sites/stevenehrlich/2021/10/06/the-richest-under-30-in-the-world-all-thanks-to-crypto/?sh=275374753f4d" target="_blank" rel="noreferrer noopener">Forbes called</a> “the world’s richest 29-year-old” last year, estimating his wealth at $22.5 billion, celebrated his 30th birthday on Sunday.



In a TV appearance on CNBC, he commented on the use of crypto to help citizens of countries with unstable currencies.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">&#8220;We often see a spike in digital asset activity coming when there is economic unrest in an area. I think Russia itself is almost an exception to that because of the sanctions in place have made it difficult for people to access digital assets as well as everything else.&#8221;</blockquote>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The past few weeks have seen huge spikes in <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BTC</a> &amp; <a href="https://twitter.com/hashtag/crypto?src=hash&amp;ref_src=twsrc%5Etfw">#crypto</a> activity in <a href="https://twitter.com/hashtag/Russia?src=hash&amp;ref_src=twsrc%5Etfw">#Russia</a>, <a href="https://twitter.com/hashtag/Ukraine?src=hash&amp;ref_src=twsrc%5Etfw">#Ukraine</a> &amp; other countries seeing massive devaluation of fiat currencies as <a href="https://twitter.com/hashtag/war?src=hash&amp;ref_src=twsrc%5Etfw">#war</a> rages&#8230;. <a href="https://twitter.com/FTX_Official?ref_src=twsrc%5Etfw">@FTX_Official</a>&#39;s <a href="https://twitter.com/SBF_FTX?ref_src=twsrc%5Etfw">@SBF_FTX</a> games out on <a href="https://twitter.com/CNBCi?ref_src=twsrc%5Etfw">@cnbci</a> the situation, and how <a href="https://twitter.com/hashtag/sanctions?src=hash&amp;ref_src=twsrc%5Etfw">#sanctions</a> might work on <a href="https://twitter.com/hashtag/DeFi?src=hash&amp;ref_src=twsrc%5Etfw">#DeFi</a> <a href="https://twitter.com/hashtag/ausbiz?src=hash&amp;ref_src=twsrc%5Etfw">#ausbiz</a> <a href="https://t.co/ojVwLeCqh2">pic.twitter.com/ojVwLeCqh2</a>&mdash; Will Koulouris (@WillKoulouris) <a href="https://twitter.com/WillKoulouris/status/1500631289094803463?ref_src=twsrc%5Etfw">March 7, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The <a href="https://cms.blockworks.co/?s=sanctions" target="_blank" rel="noreferrer noopener">potential use</a> of cryptoassets to evade sanctions has been a hot political topic, particularly in Washington.



Bankman-Fried, who <a href="https://cms.blockworks.co/crypto-industry-will-move-offshore-if-congress-doesnt-act-executives-warn/" target="_blank" rel="noreferrer noopener">testified</a> to the House Financial Services Committee in December about crypto regulation broadly, co-authored a policy document <a href="https://www.ftxpolicy.com/sanctions-compliance" target="_blank" rel="noreferrer noopener">published on Friday, March 4</a>, that outlines tools for maintaining compliance with sanctions. In it, he and FTX US President Brett Harrison concluded that crypto cannot be effectively used to avoid sanctions due to the necessity of crypto exchanges as fiat on- and off-ramps.



That conclusion is based not only on exchanges’ KYC and AML regimes, but also on the use of “advanced dynamic on-chain risk-analysis and transaction monitoring tools, such as <a href="https://cms.blockworks.co/?s=Chainalysis" target="_blank" rel="noreferrer noopener">Chainalysis</a> and <a href="https://cms.blockworks.co/?s=TRM+Labs" target="_blank" rel="noreferrer noopener">TRM Labs</a>, that help identify cryptocurrency transfers that originated from any known illicit or sanctioned source,” the policy document says.



Moreover, the pair argue the transparent nature of open, public blockchains rules out their use at the scale that would be required by the Russian government to work around international sanctions.



Harrison and Bankman-Fried closed by marveling at the tens of millions of dollars worth of cryptoassets that <a href="https://cms.blockworks.co/ukraine-cancels-proposed-airdrop-after-receiving-record-donations/" target="_blank" rel="noreferrer noopener">have been donated</a> to the Ukrainian government and relief organizations using crypto rails so far.



Bankman-Fried regularly extols the virtues of philanthropy in interviews and has said he <a href="https://cms.blockworks.co/sbf-explains-ftxs-growth-and-envisions-donating-wealth-to-good-causes/" target="_blank" rel="noreferrer noopener">intends to donate</a> almost all his personal income to good causes.



This story was updated on March 7, 2022 at 11:20 am ET with comments from Head of FTX Europe Patrick Gruhn.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/the-breakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha in your inbox. Think like an analyst. </li>
</ul>

FTX Europe

Newsletter

Blockworks Research