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India’s finance ministry recently clarified that it won’t allow crypto investors to set off losses incurred from one cryptocurrency against the gains from another crypto asset. On top of that, 30% tax on capital gains and a 1 percent tax deducted at source [TDS] proved too much for many crypto bigwigs who are already ringing alarm bells.
One of them is Nischal Shetty, CEO of WazirX. Expressing his thoughts, the top exec tweeted that the Indian government needs to reconsider their stance on digital assets and warned that if crypto entrepreneurs leave, the nation would severely lose homegrown talent and stands to miss out on the Web3 revolution.
Four years back, ZebPay, once the nation’s dominant exchange moved to Singapore. Sandeep Nailwal, Polygon’s co-founder relocated to Dubai in 2020.,told Bloomberg, “The brain drain is absolutely crazy.”
Not only entrepreneurs, but many young blockchain developers are also flocking to friendlier nations. BuyUCoin CEO Shivam Thakral told recently in an interview that more than 30 engineers left to work in the US, Singapore, and Dubai.
Vivek Belgavi, a partner at PWC, said “Right now, many Indian crypto firms, developers, and founders are trying to move to Dubai owing to its proximity to India along with its transparent and friendly taxation regime.
Can India reverse this brain drain?
On March 24, the government proposed tightening the taxation norms by prohibiting the set-off of any losses with gains from other virtual digital assets or VDAs. However, the crypto tax legislation became a law on March 25, without accommodating some of the concerns raised by the community. Due to this, many in the industry feel that the exodus might further escalate in the near future.
Siddharth Sogani, founder and CEO of Blockchain analytics firm Crebaco, recently tweeted that India would see the biggest brain drain in history in the next 8-12 months. “Making crypto difficult is not going to stop innovation. The smarties will move offshore. And you know what, these smarties will make billion-dollar enterprises in the crypto space,” his tweet read.
Polygon’s Nailwal said he wanted to live in India and promote the Web3 ecosystem but noted, it would require a great deal of effort for India to get its talent back home despite being home to the largest base of crypto owners at 100 million.