With cryptocurrency in Dubai rapidly growing, it is becoming a potential location for crypto enthusiasts.
The United Arab Emirates and Dubai are doing all the right things to attract a lot of regional projects. With other countries becoming seriously focused on the adoption of crypto, and the transactions of this mode of currency, and the Gulf States are no exception.
The United Arab Emirates have been trying to position themselves in a way that embraced the growth of the various emerging economic revolutions, and cryptocurrency has made its way to the forefront.
Despite having limited regulations, entities in the UAE have incorporated the use of blockchain technology in their operations. UAE Exchange, a leading UAE exchange house, recently partnered with San Francisco-based Ripple to enable real-time, cross-border payments using Ripple’s blockchain technology. By reducing the requirement to have third-party foreign exchange handlers, UAE Exchange has managed to cut its administrative costs.
How cryptocurrency in Dubai is claiming it’s rapid growth?
The Dubai Financial Services Authority (DFSA) had proposed a regulatory framework for various digital assets as part of its 2021-2022 business plan. The security tokens create similar rights and obligations to traditional investment instruments. However, the framework would go beyond typical securities to also cover derivatives. Ultimately, this would consistently allow for the use of Distributed Ledger Technology (DLT) and other such innovations across the spectrum of investments.
In a bid to become a pioneer in blockchain technology, the UAE has launched the UAE Blockchain Strategy 2021, pursuant to which 50% of government transactions will be conducted using blockchain technology by 2021. To solidify its vision, regulations on the use of crypto assets, including cryptocurrencies, have recently been issued.The plan would thus facilitate a safe environment for crypto trading and ensure that the market can operate successfully without significant hiccups.
‘’We are actively engaged with key stakeholders in Dubai and around the world on the future of finance and the rapidly growing area of financial technology, including various Distributed Ledger Technology applications.’’The DFSA
Bittrex Global’s chief executive officer has also said that Dubai can benefit from the growing cryptocurrency market in the Middle East, as Dubai’s regulators push on towards acceptance of blockchain-based technologies. Companies like Ripple have announced plans to set up shop in the region.
Dubai has already taken several steps to promote the use of blockchain within the city. For instance, The Dubai Airport Free Zone Authority signed an agreement with the Securities and Commodities Authority to help regulate, offer and trade crypto assets within the free zone.
World’s leading free zone and the government of the Dubai authority on commodities trade and enterprise, has announced the launch of the DMCC Crypto Centre, a comprehensive ecosystem for businesses involved in the cryptocurrency and blockchain sectors. The DMCC Crypto Centre will be looking to attract crypto talent and larger crypto firms, seeking engineering and software skills.
The Dubai Multi Commodities Centre (DMCC) has introduced a regulated activity known as “proprietary trading in crypto-commodities”, suggesting that the DMCC views cryptocurrency as commodities. However, businesses in the DMCC carrying this license are only permitted to trade on their own behalf and establishment of exchange houses and conducting ICOs is still not covered.
However, no matter how good a system is, there is always a downside. Cryptocurrency’s anonymity has led to it being used in funding criminal activities, a charge detractors of digital currency often level, whilst often failing to explain that criminals use fiat currency too. The fact that Dubai has in many ways led the charge in cryptocurrency usage, alongside it’s solid , yet light-touch regulatory framework does mean that the UAE has become one of the major hubs for blockchain and digital asset investment and development over the years.