Xapo Bank, a cryptocurrency institution based in Gibraltar, has revealed plans to extend its banking and crypto services to India, marking its entrance into the world’s second most populous nation.
Backed by industry heavyweights such as SoftBank, DST Global, and Ribbit Capital, Xapo Bank is keen to tap into the potential of a lucrative market that has recently attracted $15.5 billion in foreign inflows during the first quarter of 2023.
Xapo Bank’s Chief Executive, Seamus Rocca, expressed that the bank’s foray into India aims to bridge the financial divide in South Asia. It plans to provide hybrid banking and investment solutions to regions in South Asia that have been historically underserved by traditional banking institutions.
Xapo Bank is offering an attractive 4.1% annual interest on deposits in U.S. dollars and 1% on Bitcoin deposits. Interest payouts are distributed daily in satoshis, the smallest unit of the Bitcoin cryptocurrency.
India’s buoyant economy, which recently had its growth forecast upgraded to 6.3% by Fitch Ratings, provides a solid foundation for Xapo Bank’s operations. This is further bolstered by the country’s Q1 GDP growth of 6.1%, a performance that stands out against a backdrop of a globally slowing economy.
Yet, Xapo’s venture into India isn’t without its challenges. The country has been particularly cautious with cryptocurrencies, imposing a flat 30% tax on crypto earnings and prohibiting losses from being offset against gains.
Transactions exceeding 10,000 rupees (approximately US$122) are subject to a 1% tax at source. Furthermore, late payments can trigger a 15% annual interest penalty and could even lead to a six-month prison sentence. This regulatory environment will certainly test Xapo’s resilience as it begins its journey into the Indian market.
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