For a long time, the UAE has been one of the most progressive crypto countries in the world. For example, government-owned licensing company Kiklabb allows customers to pay their visa and business license fees through various digital assets to the Dubai Financial Services Authority, which announced its decision to work on a regulatory framework. holistic crypto as part of its 2021 business plan.
In fact, as a result of Dubai’s crypto policy, Ripple, a company that has recently been in troubled waters with the United States Securities and Exchange Commission, announced its decision to open an office in the United States. region. In addition, the United Arab Emirates and Saudi Arabia are reportedly working on a joint central bank digital currency research initiative dubbed “Project Aber”.
Commenting on why the UAE is fast becoming the destination of choice for some crypto / blockchain startups, Mazdak Rafaty, managing partner of Ludwar International Consulting FZC, told TBEN:
“If you ask anyone in the tech industry and startups anywhere in the world about the speed of government regulations, you will get the same answer,” It sure could be faster. ” However, the UAE has always been a pioneer in adopting new technologies and building regulatory frameworks to support their development. “
He further believed that blockchain as a disruptive new technology was recognized early on by regulators in the United Arab Emirates, which has enabled many government organizations not only to facilitate its development, but also to use its benefits as part of a comprehensive e-government strategy.
Finally, Rafaty added that while blockchain adoption is rapid, cryptocurrencies definitely take longer to understand, use and regulate. Even in terms of crypto adoption, Abu Dhabi was one of the first regions to introduce a well-thought-out framework for exchanges and different types of tokens in 2018.
UAE already has the base
At a time when many countries are still struggling to formulate comprehensive strategies to adopt crypto technologies in a streamlined way – some are even seeking to implement blanket bans – the UAE is apparently laying the foundation for an ecosystem. digital.
Sharing his thoughts on the topic, Mohammed Abbas, co-host of the Dubai Global Blockchain Congress, told TBEN that there are many projects, such as the decentralized ridesharing platform Drife and the fantasy sports ecosystem based on the DeFi Eleven blockchain, may have generated interest. from the private offices of the Royal Families of the United Arab Emirates as well as other high profile players, such as San Francisco-based VCs like the Draper Walled Garden, adding:
“In an effort to set the pace and become a leader in blockchain technology, the UAE has launched the Blockchain Strategy 2021 – under which 50% of government transactions will be completed using blockchain technology by 2021. This, in turn, will attract more talent and stimulate innovation in this region.
Likewise, on the subject, Marwan Alzarouni, CEO of the Dubai Blockchain Center, felt that the United Arab Emirates – Dubai, in particular – has always been forward-thinking and fast when it comes to any futuristic technology, cryptocurrencies and the blockchain is no different. .
He pointed out that Dubai launched its “Blockchain Strategy 2020” in 2016 and is already achieving its targets. Alzarouni further pointed out that when it comes to the regulation of cryptocurrencies, the UAE Securities Authority released its regulations in 2020, which was quickly followed by the country’s central bank revealing the regulations on Stored Value Facilities, which aims to clarify how crypto and other digital assets can be used as stored value when purchasing various goods and services.
The aforementioned regulations are quite detailed and seem to help position the UAE as a leader in the cryptocurrency adoption arena. Not only that, but it also provides a solid foundation for UAE startups and investors with the proper and secure environment in which to operate.
The UAE regulatory difference
Explaining his thoughts on why the UAE’s regulatory landscape is different from that of most other countries today, Abbas pointed out that the Know Your Customer, Anti-Money Laundering and Counter-Terrorist Financing laws which are currently in place in the region are progressive compared to those of other “global financial hubs”.
On the subject, Saeed Al Darmaki, co-founder of crypto fund Alphabit, told TBEN that the UAE has been looking to the future with the adoption of crypto technologies for a long time, with the regulatory outlook for Arab powers looking very positive. at the moment, adding:
“Regulated crypto exchanges will be launched in the coming months. With the ESCA regulations, local banks should be more open to crypto transactions on local bank accounts. Incubators and accelerators are supporting crypto companies here now and will continue to do so. The government is very supportive of blockchain technology. ”
A similar sentiment is shared by Austin Alexander, MENA region general manager of the Kraken cryptocurrency exchange, who believes that to date the UAE has been among the most proactive places in the world in regulation. of cryptocurrency. In this regard, he pointed out that Abu Dhabi Global Markets was one of the first regulatory jurisdictions to draft a basic framework specifically for digital asset trading, adding:
“No regulation is perfect, and as crypto companies launch and grow in the UAE, FSRA or other regulators may come to see that there is room for improvement. That being said, the UAE is clearly establishing itself as one of the most forward-thinking governments in the world when it comes to cryptocurrency and innovative industries at large.
Are the premises favorable?
Regarding how local people in the UAE perceive the country’s stance on technology, Rafaty said most locals have recognized the government’s blockchain initiatives. However, he added that it will be some time before these projects start to bear fruit.
Additionally, he also shared that on the crypto side, most of his private and business contacts in the UAE are, to some extent, involved and / or invested in various crypto and altcoin offerings thanks in large part to the bullish growth that has occurred. in the sector in recent months.
Likewise, Alexander believes UAE residents and businesses tend to embrace new innovations with more enthusiasm than most, and cryptocurrency was no exception. However, he added that for some time now, UAE residents have had difficulty investing in digital assets, as there are few legitimate local gateways for the crypto exchange, adding:
“It has delayed adoption and reduced the ability of local businesses to rely on technology. With the recent new onshore regulations that will help further foster innovation, we should soon see access to virtual assets increase significantly. With the UAE’s domestic virtual asset markets, which have so far been the missing piece of the puzzle, we should see a massive boom in economic growth around virtual assets.
Finally, Abbas believes that local residents and businesses in the UAE quickly learned about the usefulness of the blockchain ecosystem and looked at cryptocurrencies not only as another financial instrument for monetary gain, but also as a means of exchanging and settling transactions between users. operating in this area.
In his opinion, the barriers to entry are decreasing day by day and that soon, mainstream retail crypto offerings will flourish in the country. “The UAE is probably the only country that has been able to host some of the biggest blockchain summits and bring crypto pioneers, think tanks and investors together on a common platform to solve global issues around inclusion. financial and neo-banking solutions, ”Abbas added.
Some of those interviewed attended the Global Blockchain Congress in Dubai on February 9, hosted by Agora.