Almost immediately after the Reserve Bank of India (RBI) decided to ban regulated entities from dealing with them, Indian cryptocurrency exchanges have started looking at moving their offices abroad.
According to a report by The Economic Times, cryptocurrency exchanges like Zebpay, Unocoin, CoinSecure, BuyUcoin and BTCX India, are looking to move their head offices to places like Singapore, Belarus, or Delaware in the United States.
Many of them have already approached their advisers and are working on various tax structures, the report stated.
The state of nervousness in the Indian cryptocurrency market at the moment is because of the RBI announcement, which many are viewing as a knockout blow for the business in India.
India is home to more than five million investors who have bought or traded in Bitcoin and other major cryptocurrencies.
"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," Shivam Thakral, CEO, BuyUcoin, told ET.
Market watchers reckon many exchanges have already moved abroad and are also contemplating products that they could offer to Indian customers, despite moving base.
While RBI has given three months’ time to banks to wind up operations, cryptocurrency exchanges are trying to settle accounts of their customers before they make an exit from India, ET reported.
Looking at the positive side, these exchanges are hopeful that shifting base outside India might help them deal with Indian laws as many won’t apply to them any longer. Permanent establishment is a concept in taxation that determines which jurisdiction has the right to tax the company.
Tax experts told the financial daily that these exchanges may have only two options — either shut shop or move to any other jurisdiction.
"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," Riaz Thingna, Director, Grant Thornton Advisory, was quoted as saying.