CNB Business News: Crypto Firms Headed to Dubai
Thursday, April 28, 2022
Crypto firms will flock to Dubai as UAE crypto regulation guides crypto sector rather than curbs it, says GlobalData
Following the UAE’s regulation within the crypto sector and its moves to develop a crypto hub;
Amrit Dhami, Thematic Analyst at GlobalData, a leading data and analytics company, offers her view:
“The UAE’s regulation is more about overseeing the development of the crypto sector than curbing it. By accepting the inevitability of mainstream cryptoassets and helping the domestic crypto sector grow, the UAE will continue to attract a flock of crypto firms. The country is showing that crypto regulation doesn’t have to be a deterrent, and can actually reassure private firms and investors.
“Regulating crypto supports the UAE’s growing reputation of having a diverse investment landscape and being at the forefront of financial innovation. Lawmakers across the world, including the UK, are starting to navigate cryptocurrency regulation. The UAE is beginning with a light-touch approach that will attract crypto firms and boost the sector. We can compare this to Singapore, a rival crypto hub that is limiting crypto advertisements due to the volatility of cryptoassets. Sure enough, Bybit, a crypto exchange previously based in Singapore, very recently relocated to Dubai.
“A herd mentality might also be fuelling the growth of this crypto hub, with the relocation of crypto platforms such as Crypto.com and Bybit to Dubai reassuring others thinking of following suit. Dubai’s new Virtual Asset Regulatory Authority (VARA) has already granted licenses to Binance and FTX Europe, prominent players within the sector.
“Cryptoassets may be volatile, but this is not stopping consumers from increasingly using them as a payment method. Whether governments like it or not, the popularity of cryptocurrency isn’t going to wane. Rather than ignore this clear trend, it could be safer for consumers and better for governments’ reputation if a precedent was set for government involvement in the domestic crypto sector. There is the risk that the UAE grants a license to an unscrupulous crypto firm, so the strength of its approach rests on the rigour of VARA’s investigations.
“The adoption of crypto on a local level is noticeable in the UAE. For example, grocery delivery service YallaMarket is accepting payments in crypto and has floated the idea of paying salaries in crypto. Consumers have a positive, optimistic sentiment towards the concept – YouGov found that trust in cryptocurrencies across the world was highest among adults in the UAE. The government’s regulatory stamp of approval on virtual assets is likely to have helped drive this acceptance. Not only is there popular demand for crypto services, but there’s also a pool of enthusiastic, crypto-aware local talent for recruiters to tap into.”