The United Arab Emirates has long been one of the most advanced crypto countries in the world. For example, state-owned licensing company Kiklabb enables customers to pay their visa and trade license fees through various digital assets to the Dubai Financial Services Authority, which announced its decision to work on a holistic framework for crypto regulation as part of its 2021 business plan.
In fact, Ripple, a company recently in murky waters with the U.S. Securities and Exchange Commission, announced its decision to open an office in the area because of Dubai’s crypto-friendly policies. In addition, the UAE and Saudi Arabia are reportedly working on a joint central bank digital currency research initiative dubbed the “Project But”.
Mazdak Rafaty, managing partner of Ludwar International Consulting FZC, told Cointelegraph why the UAE is fast becoming the preferred destination for some crypto / blockchain startups:
“If you ask someone in tech and startup around the world about the speed of government regulation, they’ll get the same answer: ‘It could definitely be faster. ‘However, the UAE have always been at the forefront of introducing new technologies and establishing supporting regulatory frameworks for their development. “
He also believed that blockchain as a novel disruptive technology was recognized very early by the UAE regulators, which is why many government organizations were instructed not only to facilitate its development, but to actually use its advantages as part of a comprehensive e-government strategy .
Finally, Rafaty added that while blockchain adoption was quick, cryptocurrencies definitely needed more time to understand, use, and regulate. Abu Dhabi was one of the first regions to introduce a well-designed framework for exchanges and different types of tokens back in 2018.
The UAE already has the base
At a time when many countries are still struggling to formulate comprehensive strategies for an optimized introduction of crypto-enabled technologies – and some even want to introduce blanket bans – the UAE is apparently laying the foundation for a digital ecosystem.
Mohammed Abbas, co-host of the Dubai Global Blockchain Congress, told Cointelegraph that many projects, such as the decentralized ride-sharing scheme Drife and the blockchain-based fantasy sports ecosystem DeFi Eleven, have sparked interest from the private offices of the UAE’s Royal Families as well as other well-known companies like VCs from San Francisco like the Draper Walled Garden.
“To set the pace and become a leader in blockchain technology, the UAE launched the Blockchain Strategy 2021. According to this strategy, 50% of government transactions will be carried out using blockchain technology by 2021. This in turn will attract talent and more will drive innovation in this region. ”
Similarly, Marwan Alzarouni, CEO of the Dubai Blockchain Center, believed that the UAE – Dubai in particular – have always been forward-thinking and fast-paced when it comes to futuristic technologies, where cryptocurrencies and blockchain were no different.
He emphasized that Dubai launched its “Blockchain Strategy 2020” in 2016 and that it has already achieved its goals. Alzarouni also noted that the U.S. Securities and Commodities Authority issued an ordinance in 2020 that prompted the country’s central bank to quickly unveil the Ordinance on Stored Value Facilities, which aims to clarify how crypto and Cryptocurrencies apply.Other digital assets can be used as stored value when purchasing various goods and services.
The above regulations are quite detailed and appear to help position the UAE as a leader in cryptocurrency adoption. In addition, it offers startups and investors in the UAE a solid foundation with the right and safe environment to operate.
The regulatory difference in the UAE
Abbas explained why the regulatory landscape in the UAE is different today from most other countries, and pointed out that the laws currently in force in the region for your customers’ knowledge, anti-money laundering and counter-terrorism laws are progressive compared to them are from other “global financial centers”.
On the subject, Saeed Al Darmaki, co-founder of the Alphabit Crypto Fund, told Cointelegraph that the UAE has long been forward looking with the adoption of crypto-enabled technologies and the regulatory outlook for Arab power plants is very positive at the moment, adding:
“The regulated crypto exchange will begin in the next few months. With the ESCA regulation, local banks should be more open to crypto transactions on local bank accounts. Incubators and accelerators are now and will continue to support crypto companies here. The government is very supportive of blockchain technology. ”
A similar sentiment is shared by Austin Alexander, managing director of the MENA region of the Kraken cryptocurrency exchange, who believes that the UAE remains one of the most proactive locations in the world in regulating cryptocurrency to this day. In this regard, he noted that Abu Dhabi Global Markets was one of the first regulators to design a framework from the ground up specifically for the exchange of digital assets, adding:
“No regulations are perfect, and as crypto companies start and expand in the UAE, the FSRA or other regulators may find that there is room for improvement. Even so, 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 in general. “
Do the locals support?
Regarding the UAE’s local population’s assessment of the country’s tech-friendly stance, Rafaty felt that most residents recognized the government’s blockchain initiatives. However, he added that it will be some time before these projects actually bear fruit.
On the crypto side, he also shared that on the crypto side, most of his private and professional contacts in the UAE are to some extent involved and / or invested in various crypto and altcoin offerings, thanks in large part to bullish growth in the industry over the past few months.
Similarly, Alexander believes that UAE residents and businesses are more enthusiastic about new innovations than most, and cryptocurrency was no exception. However, he added that UAE residents have been struggling to invest in digital assets for some time as there are few legitimate local gateways for crypto exchanges, adding:
“This has delayed adoption and reduced the ability of local businesses to build on the technology. With the recent new regulations on land that will further fuel innovation, access to virtual assets is likely to increase significantly soon. Given the UAE domestic virtual asset markets that have so far been the missing piece of the puzzle, we should see a massive boom in virtual asset economic growth. “
Finally, Abbas believes that residents and businesses in the UAE have quickly adjusted to the usefulness of the blockchain ecosystem and viewed cryptocurrencies not just as another financial tool for making money but also as a means of exchanging and processing transactions between users work within this domain.
In his view, the barriers to entry are getting lower by the day and soon popular crypto retail offerings will flourish in the country. “The United Arab Emirates is probably the only country that has been able to host some of the largest blockchain summits, bringing crypto pioneers, think tanks and investors together on a common platform to address global issues related to financial inclusion and neo- Addressing banking solutions, “added Abbas.
Some of the respondents attended the Global Blockchain Congress in Dubai on February 9th, hosted by Agora.
