Gold trader gets Dubai license to trade and store cryptocurrencies

A collection of Bitcoin (virtual currency) tokens. (AFP)
Updated 13 February 2018
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Gold trader gets Dubai license to trade and store cryptocurrencies

DUBAI: Gold trader Regal RA DMCC has become the first company in the Middle East to be awarded a license by the Dubai Multi Commodities Center (DMCC) to trade in cryptocurrencies.
The license allows the company to store bitcoin, ethereum and other alternatives to the best-known digital currencies in a vault located in the headquarters of the commodities free zone, DMCC said in a statement on Tuesday.
The vault will have no connection to a network and physical devices are fully insured for the crypto-commodities market value against theft, hacking or natural disaster, it said. Crypto-commodities are those that trade in bitcoin.
Cybertheft is seen as a major risk for bitcoin trading, highlighted by last month’s heist of about $530 million from a Tokyo-based exchange, a theft rivalling Mt. Gox’s as one of the biggest for digital currency.
There have been increasingly loud warnings around the world about the dangers of investing in cryptocurrencies, which remain largely unregulated.
However, Regal RA DMCC’s announcement came as the regulator of Abu Dhabi’s international financial center said this week it could create rules for exchanges handling virtual currencies, in a sign that authorities in the UAE may allow trade in cryptocurrencies to develop.
Regal RA DMCC is a subsidiary of Regal Assets, an alternative asset firm which has offices in the United States, Canada and the UAE.
Dubai is a major hub for gold trading, thanks to its proximity to the world’s largest gold consumer, India.
“At the heart of DMCC’s long term strategic growth plan is the use of technology and innovation to disrupt and connect new markets, industries and customers,” said Ahmed bin Sulayem, executive chairman, DMCC.
Elsewhere in the Gulf, many regulators are wary of cryptocurrencies. The Saudi Arabian central bank has advised people not to trade bitcoin, and last week, Qatar’s central bank told banks not to deal in any way with cryptocurrencies.


Dubai property developers put bond plans on hold

Updated 59 min 16 sec ago
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Dubai property developers put bond plans on hold

  • Dubai property prices have fallen since a mid-2014 peak, hurt by a period of weak oil prices and muted sales
  • Residential prices fell 6 to 10 percent in 2018 and are expected to drop 5 to 10 percent more this year

DUBAI: Dubai’s Emaar Properties and state-owned developer Nakheel have put on hold plans to issue US dollar-denominated bonds, Emaar and sources familiar with the bond issues said, amid a real estate downturn and volatility in emerging markets.
Emaar told Reuters that it had put on hold a planned bond issue, blaming rising interest rates but did not elaborate. Nakheel declined to comment.
Three financial sources said the firms had planned dollar-denominated sukuk, or Islamic bonds, and would have had to pay a yield premium to attract enough investors due to concerns about Dubai’s property price slide and emerging market volatility.
Dubai property prices have fallen since a mid-2014 peak, hurt by a period of weak oil prices and muted sales, although the slide has not come close to the more than 50 percent plunge seen in 2009-2010, which pushed Dubai close to a debt default.
Residential prices fell 6 to 10 percent in 2018 and are expected to drop 5 to 10 percent more this year, according to Savills. The drop has hurt developer earnings.
Emaar, developer of Burj Khalifa, the world’s tallest building, reported a 29 percent fall in the third quarter last year, while Dubai’s second-largest listed developer DAMAC reported a 68 percent drop.
The financial sources said Emaar and Nakheel hired banks a few months ago to issue Islamic bonds but shelved the plans.
An Emaar spokesperson said its decision to put its plan on hold was not linked to the property market performance.
“The bond was considered more than a year ago and was put on hold due to increasing interest rates. The decision was not based on market conditions,” the spokesperson said.
Dubai government owns a minority stake in Emaar.
Nakheel, developer of palm shaped islands off Dubai, was one of the worst hit by Dubai’s 2009-2010 real estate crash, forcing it into a massive debt restructuring. It has not issued public debt since it nearly defaulted in 2009.
The market downturn has put pressure on property companies’ existing bonds, which investors use as a parameter to establish the price of new debt sales from borrowers in the same sector.
In secondary debt markets, yields of bonds issued by Dubai developers have risen significantly over the past few months, underperforming corporate debt from other sectors.
DAMAC’s $500 million sukuk due in 2022 and $400 million Islamic paper due in 2023 saw their yields spike by over 200 bps and 150 bps, respectively, since early November.
BofA Merrill Lynch last week forecasted weaker booked sales and gross margin for DAMAC, saying it was likely to be pressured by the property market and upcoming debt and land payments.
DAMAC did not immediately respond to a request for comment.
Yields on a $600 million sukuk issued by private developer Meraas, due in 2022, have jumped by around 120 basis points in the same period. Meraas declined to comment on the move.