Dubai has positioned itself as a leading hub for digital assets through favorable cryptocurrency regulations and progressive policies. This approach has drawn the attention of Indian traders, who face regulatory challenges and high taxes in their home market. Clear licensing requirements, innovation-focused frameworks, and supportive infrastructure have made Dubai a top destination for crypto businesses and traders from India.
The Virtual Assets Regulatory Authority is a central body that regulates the crypto ecosystem in Dubai. VARA has imposed Anti-Money Laundering and Counter-Terrorist Financing regulations on the entire crypto ecosystem, thus creating a secure environment for trading and innovation. Substantial operation requirements are required by Virtual Asset Service Providers to acquire licenses and operate legally in Dubai. Over 1,000 crypto companies have registered for licenses since the launch of the Dubai Virtual Assets Law earlier this year, in May 2023.
Along with this, the crypto tokens and investment tokens also fall under the jurisdictions of discretionally different regimes, which are monitored by the DFSA, being a regulated authority in DIFC. In the year 2022, the DIFC introduced the Crypto Token Regime which included institutional adoption, market infrastructure, and fraud prevention. Through the year 2024, most of the popular global exchanges, such as Binance, BitOasis, and Palmex, to name a few, are operating in Dubai with approved licenses.
India introduced a 30% tax on crypto trading profits in 2022, alongside a 1% tax deducted at source (TDS) on transactions exceeding ₹10,000. These high taxes have reduced trading volumes, forcing traders to seek alternatives outside the country. While India continues to have strong grassroots crypto adoption, much of this activity has moved to alternative channels due to unfavorable regulations.
Many Indian crypto firms and traders are now migrating to Dubai, drawn by the UAE’s low-tax environment and crypto-friendly policies. This shift has accelerated as businesses seek stability and growth opportunities in Dubai, contrasting sharply with India’s cautious approach.
Dubai has rapidly emerged as a global crypto hub, attracting companies and capital from around the world. The UAE's growing prominence in the sector is reflected in the Henley Crypto Adoption Index 2024, where it ranks third globally, with a score of 41.8 out of 60. The Middle East and North Africa (MENA) region reported $400 billion in cryptocurrency transactions in 2023, underscoring Dubai’s strategic importance.
The Dubai Multi Commodities Centre (DMCC) hosts over 23,000 companies, including many Indian firms relocating to the UAE. Ripple, a major player in digital finance, recently received regulatory approval from the Dubai Financial Services Authority to expand operations in the region.
Dubai actively promotes crypto and blockchain innovation through initiatives like the Metaverse Strategy. This strategy aims to attract over 1,000 companies and create 40,000 virtual jobs by 2030. Regulatory sandboxes, launched by the DFSA, provide controlled environments for testing new financial products, ensuring Dubai stays ahead in adopting new technologies.
The infrastructure in Dubai also supports institutional investors. Banks like Standard Chartered have launched crypto custody services, bridging the gap between traditional finance and digital assets. These services cater to firms seeking secure ways to store digital assets, further enhancing Dubai’s position as a financial hub.
Dubai’s proactive regulatory framework and business-friendly policies are transforming it into a global hub for cryptocurrency. The migration of Indian traders to Dubai highlights the UAE's appeal as a destination for innovation, growth, and stability. With over 1,000 crypto firms applying for licenses and significant adoption rates, Dubai offers an attractive environment for digital finance. As India grapples with strict tax policies and regulatory uncertainty, Dubai continues to lure traders and companies looking for clear regulations and opportunities to expand.
The UAE’s strategic focus on fostering a secure and innovative crypto ecosystem ensures its position at the forefront of the global digital finance landscape. With ongoing initiatives and a supportive environment, Dubai is well on its way to becoming a leader in the crypto and digital asset space.