Are The UAE setting itself to be the next “Global Crypto Hub”?
UAE is a country world-famous for its oil, enormous wealth, and obviously the ever-popular tourist destination — Dubai but it has recently been dubbed the “Crypto Oasis” for DeFI enthusiasts. UAE also with its deemed friendly regulations could lay the groundwork for crypto regulations worldwide and attract more investments into the country. So, is the UAE looking to be the next powerhouse in the crypto space? And What benefits can the country receive for being friendly to this growing space?
The Next Global Hub?
The United Arab Emirates began its journey into the Blockchain and Crypto space in 2018 with the launch of “Emirates Blockchain Strategy 2021” which detailed to use of blockchain technology to migrate 50 percent of government transactions onto the blockchain platform by end of 2021, this was expected to save the country more than $3 Billion in paperwork and will help Dubai be the first city in the world to operate fully on blockchain technology. The year 2018 also saw the Financial Services Regulatory Authority, or FSRA, of the Abu Dhabi Global Market published guidance on cryptocurrencies, exchanges and initial coin offerings. The FSRA continued to actively engage with the industry, granting several regulatory approvals to companies like the BitOasis cryptocurrency exchange in 2019.
The major development in the UAE crypto space in 2021 should see more companies setting up shop in the country, as the UAE Securities and Commodities Authority is on the final stages of the framework to issue a nationwide license for Virtual Asset Service Providers to operate within the country. The Crypto License that was drafted using the help from the Paris-based Financial Action Task Force guidelines and ongoing crypto policies in the United States, United Kingdom, and Singapore, should operate in what is called a “Hybrid Approach.” This means that the chief of the regulatory body will handle the regulation in consultation with the central bank but local financial institutions can also develop their own native guidelines.
Free zones around Dubai and Abu Dhabi have also been implemented in the regulatory framework in order to attract more crypto businesses and users within the country. The DMCC Crypto Centre launched in May 2021 is currently the largest free trade zone in UAE which focuses on promoting cryptographic and blockchain technologies in Dubai. DMCC also has set up its own regulatory framework in March 2021, has more than 100 organizations operating in the crypto space with a further 900 applying for license.
“Five years ago, you wouldn’t see people coming to Dubai to do the cryptocurrency business … we’re open-minded, and we’re willing to change regulations with reason,” Dr. Marwan Al Zahrouni, chief executive of the Dubai Blockchain Centre
UAE is also looking to set up a regulatory framework for the mining sector as the country sees a huge opportunity to attract investments into the sector. Of course, crypto is not and will not be a legal tender in UAE but all these developments meant that the country is seriously aiming to increase its exposure in the crypto space. With the legal framework for a crypto, license is expected to be introduced by the end of the first quarter of 2022, the continuous development of many free zones throughout the country with relaxed taxation and crypto-friendly regulation is true sign that should spearhead UAE’s mission to become a rising Global Crypto Hub in the Middle East.
What is the potential benefit to the country?
We all know from countries like Kazakhstan and El Salvador that there are certainly a lot of advantages from being friendly to crypto, one of the main ones is attracting investments and people to the country. As the Cryptocurrency hype is not going to go away with the recent dip, countries are definitely better off in regulating it than fighting against it. We see that Kazakhstan which saw the release of its crypto-friendly regulation in 2019 showed an increase in foreign direct investment by 3000% at $3.3 Billion from its 2018 number. UAE obviously could strengthen its status as a global strategic business hub with investments from the crypto sector.
UAE is also in its location a perfect hub for the global crypto sector as it can leverage on its connectivity between the Middle East, Northern Africa, Asia, and the West. This means it can take advantage of countries like China, Russia, or Kazakhstan who might be seeking a new place to relocate after the unrest in their own country.
One of the greatest benefits UAE can receive from inviting the cryptocurrency sector is the ability to diversify its revenue portfolio even further. UAE over the years has continued to diversify its revenue from building tourism destinations to organizing sports events, this was done to reduce the dependency it has on commodities such as Oil. Cryptocurrency is obviously the future and UAE’s oil reserves will one day be depleted, so this friendly regulation should spearhead the country’s growth for the years to come.
“The country’s historical reliance on commodities such as oil could be seen as a key driver behind its dive into digital assets. The government was quick to recognize the many benefits to be derived from digital assets for institutions and retail users, and so acted quickly to implement the necessary support measures in place to allow financial innovation to flourish.” — said Brad Yasar, co-founder, and CEO of EQIFi.
We in Nagaya Technologies Pte. Ltd is excited about the developments in the cryptocurrency space that is going on in a lot of countries. We believe that innovations should be properly balanced with the right regulations in order for the cryptocurrency sector to flourish. This is why we decided to create the world’s first hybrid cryptocurrency called Nagaya that will provide a lot of value to our holders with the proper transparency and regulations. For more information regarding the latest updates on Nagaya and our whitepaper, you can visit us at nagaya.io
Or you can talk to us at t.me/nagayaofficial