SG’s crypto brain drain and India’s new digital rupee

The Top Up is Tech in Asia’s free newsletter that breaks down the biggest stories and trends in fintech. [Read from your browser]( The Top Up 💵 Welcome to The Top Up! Delivered every Wednesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in fintech. If you’re not a subscriber, get access by [registering here](. Written by Melissa Goh Fintech Journalist Hello {NAME} , When one door closes, another door opens. In a tight job market, fresh graduates adopt a spray-and-pray approach to job applications, going through multiple rejections before receiving an offer. While a lucky few will get their dream jobs, most will settle for another position, as they don’t have the luxury of time and unlimited finances. But the truly determined will find ways to get the job of their dreams - even if that means taking a detour. Crypto providers hoping to obtain a license in Singapore will have to continue waiting it out as the country's central bank offers the coveted digital payments services license to a select few. After all, the Monetary Authority of Singapore is one of the toughest regulators in the world. Since it opened license applications in early 2020, the city-state has attracted notable names such as Binance, the world’s largest crypto exchange by trading volume. Many who have been rejected or asked to withdraw their applications are now seeking new homes. Binance had seemingly led the charge when it opted for Dubai: With its free zones and generous tax incentives, the Emirati city is fast becoming an alternative destination for crypto firms. In this week’s Big Story, we spoke to crypto players in Singapore and Dubai about what drew them to their home markets. Conversations with both successful and unsuccessful permit applicants in Singapore also shed light on a process that many have called opaque. As one crypto observer put it, it’s premature to assume that Singapore has seen the last of Binance. “I'm 100% sure they’ll come back when it’s the right time.” -- Melissa THE BIG STORY [Is Dubai stealing Singapore’s thunder in crypto?]( Image credit: Timmy Loen Binance led the charge when it withdrew its application in the city-state in favor of Dubai. It appears that many are following suit. THE HOT TAKE  India warms up to crypto Here’s what happened: - India will launch its own digital rupee, a sovereign-backed facility that is likely to debut by early 2023. - Unlike private digital tokens, the digital rupee blockchain gives the government the ability to track transactions. - The country also plans to impose a 30% tax on ‌income from the transfer of virtual assets. Here’s our take: After swinging back and forth on its crypto stance, which has ranged from promoting crypto to banning them, India moved a step closer toward adopting and legitimizing digital assets last week. Citizens can potentially use the digital rupee in their e-wallets to pay for goods and services. A key difference is that the funds would be “from the central bank” and “fully backed by the sovereign,” a top government source [told The Economic Times](. The digital rupee will build upon existing consumer habits around e-wallets and digital payments. In India, [3 billion transactions]( already take place over United Payments Interface - the digital payment system developed by India’s largest banks - each month. The move comes as crypto trading and ownership soared in India in the past year. [Estimates]( put the number of crypto investors in the country at 15 million to 20 million, who roughly hold US$6 billion in crypto assets. According to blockchain data platform Chainalysis, India [ranks second]( among countries with the highest crypto adoption in the world, trailing only Vietnam. We explored Vietnam’s crypto boom in [this earlier story](. Several reasons have fueled the rise of crypto trading in India. Investing in equities can take up to three to four days due to documentation, but investing in crypto takes less than an hour, a Chainalysis report noted. Many freelancers and those doing tech-related work for employers abroad are also asking to be paid in cryptocurrency out of convenience and interest in owning digital tokens. While retail demand in the country is strong, a large proportion of crypto activity (42%) are being driven by institutional-sized transfers of above US$10 million. What is India hoping to achieve with the digital rupee? The new Central Bank Digital Currency (CBDC) is expected to give a big boost to India’s digital economy, spurring higher levels of digital transactions since all citizens - even those without bank accounts - can access retail CBDCs in theory. Also, CBDCs could lead to efficiency gains and a “cheaper currency management system,” India's Finance Minister Nirmala Sitharaman said in a recent budget speech.  Nirmala Sitharaman, the Minister of Finance and Corporate Affairs of India If the government can successfully design a CBDC that becomes the de facto currency, it could reduce illicit transactions and money laundering that occur on private digital assets - which it lacks oversight of - and on fiat currency transactions that take place on privately run e-wallets. But while a CBDC gives the central bank the ability to track transactions, [some argue]( that the fintech firms operating e-wallets may lose visibility on customers and their transacting behavior. This might impact their ability to evaluate their clients and extend them loans. India is also hoping to deter speculative trading by introducing a 30% tax rate on incomes from the transfer of digital assets. However, the high tax rates might simply push investors to migrate to service providers in other countries offering more competitive rates instead. The UK’s tax regulator has similarly said that staked digital tokens that are used as collateral or lent out will be subject to a [capital gains tax](. However, some industry watchers have pointed out that these new rules could result in investors tracking and reporting “hundreds to thousands” of transactions to stay compliant, which could be unfeasible in practice. – Melissa NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the fintech scene [here](.  1️⃣ [Vietnamese investment app snags US$6m from Sequoia India's Surge, Y Combinator]( Launched in January 2021, Infina lets users invest in a range of asset classes such as stocks and fixed-income products with just US$22.  2️⃣ [Ex-Lazada, Snapp execs’ restaurant payments firm raises $17m in seed money]( United Arab Emirates-based Qlub, which enables customers to pay for their orders via a QR code, is expected to launch in overseas markets in the coming weeks.  3️⃣ [Tiger Global leads $15m round of ex-Lazada exec’s fintech firm]( API platform Ayoconnect will use the new capital to launch new products, including a direct debit service and a cards-as-a-service offering. The startup was valued at US$80 million in its latest funding round. FYI 1️⃣ [Can Ovo, ‘shunned’ by Tokopedia, keep the crown?]( Since Gojek’s merger with Tokopedia, Ovo has taken a backseat on the Tokopedia app, where Gojek’s digital wallet GoPay takes center stage for payments, cashback, and pay-later services.  2️⃣ [Women-focused fintech firm eyes $5m series A funding]( Singapore-based Lucy offers personalized fintech solutions such as prepaid cards and remittances to women entrepreneurs from economically weak sectors. That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. In the meantime, if you have any feedback or ideas, feel free to get in touch with Terence, our editor-in-chief, at terence@techinasia.com. See you next week! P.S. 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