MENA region makes strides in digital assets as crypto scene heats up

Analysis MENA region makes strides in digital assets as crypto scene heats up
Heightened digital activity is not reserved for a niche group of blockchain aficionados alone; instead it’s spread across different industries. (AFP/File)
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Updated 04 April 2022

MENA region makes strides in digital assets as crypto scene heats up

MENA region makes strides in digital assets as crypto scene heats up
  • From luxury fashion to travel to art, crypto is increasingly finding more acceptance

DUBAI: Crypto has gone mainstream within a very short span of time as the Middle East region is making major strides in digital assets with a slew of new regulatory measures.

From luxury fashion to travel to art, crypto is increasingly finding more acceptance across diverse industries, indicating that these new forms of digital currencies are here to stay.

With this space becoming bigger and bigger, it will continue to draw the attention of crypto enthusiasts.

Opinion

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Recognizing that these digital assets will only grow from here, the region is making necessary strides by introducing new mandates.

Dubai, for instance, adopted a new law to regulate virtual assets such as bitcoin and non-fungible tokens, or NFTs, and established an entity called the Virtual Asset Regulatory Authority. These are clear moves to legitimize a nascent industry and set the stage for growth.

“I see this as very positive news that will hopefully lead to massive adoption for digital assets in the region,” said Zina Ashour, co-founder and marketing director of iOWN, a regional tech company that invests in developing fintech solutions built on blockchain.

“This means that the regulators want to be part of the big movement toward digitizing the financial sector via blockchain and cryptocurrency,” she said.

Ecosystem

Similarly, FTX, a global crypto exchange, received an official license to operate in Dubai. This was closely followed up with an operating license granted to Binance, one of the largest crypto providers in the world that has also set up a headquarters in the emirate.

This series of steps come on the back of Dubai’s decision to launch the DMCC Crypto Center in June 2021. This was established as a comprehensive ecosystem for businesses operating in the cryptographic and blockchain sectors.

The center is also expected to house a leading crypto advisory practice led by CV Labs, the entity behind the Switzerland government-backed Crypto Valley. The valley has previously spawned crypto leaders such as cardano and ethereum.

FASTFACTS

• The digital economy contributes about 4.3 percent of the GDP in the UAE, which is equivalent to 100 billion dirhams ($27 billion).

• There are more than 1,400 startups in the country, with 1.5 billion dirhams allocated to them.

• The emirate has 90 investment funds in the digital sector and 12 business incubators.

• The total value of startups in the country is estimated to be 90 billion dirhams.

“Crypto and blockchain technologies have an enormous potential to transform global trade and supply chains. This is one of the key drivers behind launching the DMCC Crypto Center,” said Ahmed bin Sulayem, executive chairman and chief executive officer, DMCC, in a press statement.

“With the DMCC Crypto Center providing a progressive and supportive regulatory environment, a strong pool of industry talent, and an ecosystem that provides access to capital, resources and opportunities to crypto firms, we are perfectly placed to support crypto businesses from across the world,” he added.




Ola Doudin

Regulatory framework

Industry experts say the growing interest of non-regional platforms for local licenses can validate the size of the market opportunity in the region.

“From a regulatory perspective, we have reached escape velocity,” said Ola Doudin, CEO and co-founder of BitOasis, a UAE-based digital asset trading exchange and platform.

She pointed out that there is momentum and a competitive dynamic among policy-makers and regulators to launch frameworks for Virtual Asset Service Providers, or VASPs.

Bahrain and the Abu Dhabi Global Market were the first to do so, with Dubai having just passed its Virtual Assets Law. The Emirates Securities Commodities Authority is the next.

Doudin explained that this trend is driven by two factors — the realization that Web 3.0 is upon us, adoption rates are high; and enabling Web 3.0 through balanced regulation will attract investment, create jobs, and position countries as centers of innovation.

“We expect to see other GCC and MENA markets follow suit over the next 12 to 24 months,” she added.

The BitOasis CEO highlighted that 19 out of 20 top crypto-markets (by weighted crypto activity) are in the emerging or developing economies. “So it’s not surprising that when a territory announces it has introduced a regulatory framework — as we are seeing across the UAE right now — there is naturally a surge of interest and investment,” she said.

From a regulatory perspective, we have reached escape velocity

Ola Doudin, CEO and co-founder of BitOasis

Digital economy

The crypto expert estimates venture investment into the sector across the GCC will exceed $500 million this year alone.

Currently, the digital economy contributes about 4.3 percent of the GDP in the UAE, which is equivalent to 100 billion dirhams ($27 billion), according to the latest statistics from the Dubai Chamber for Digital Economy. There are more than 1,400 startups in the country, with 1.5 billion dirhams allocated to them. The emirate has 90 investment funds in the digital sector and 12 business incubators. The total value of startups in the country is estimated to be 90 billion dirhams.

In fact, this heightened digital activity is not reserved for a niche group of blockchain aficionados alone; instead it’s spread across different industries. With the basic understanding of crypto growing among the masses, this will benefit most businesses in the long run.


Argentina government crises build as Economy Minister Guzman resigns

Argentina government crises build as Economy Minister Guzman resigns
Updated 03 July 2022

Argentina government crises build as Economy Minister Guzman resigns

Argentina government crises build as Economy Minister Guzman resigns
  • Inflation is running above 60 percent and the peso currency is under growing pressure

BUENOS AIRES: Argentina’s economy minister Martin Guzman resigned on Saturday, a blow to a government beset by mounting economic crises.
Guzman, who led Argentina’s debt restructuring deal with the International Monetary Fund and creditors, posted a letter to his Twitter account announcing his decision.
“I write to you to present my resignation as economy minister,” Guzman said in a letter addressed to President Alberto Fernandez. He had been minister since late 2019.
The government is facing its lowest approval rating since taking office in 2019. Inflation is running above 60 percent and the peso currency is under growing pressure. Sovereign bonds have plummeted.
The resignation leaves the ministry leaderless just as Guzman was expected to travel to Europe to negotiate a $2 billion debt deal with the Paris Club of sovereign lenders.
Investors are skeptical about the economy and infighting in the governing coalition between moderates like Guzman and a more militant wing including Vice President Cristina Fernandez de Kirchner.
Mariel Fornoni, director of the Management and Fit consultancy, said the resignation of a key ally was a reflection of President Fernandez’s loss of power since a painful midterm election defeat last year.
“It is the chronicle of a death foretold. Ever since the loss in last year’s legislative election,” she said, adding that a militant wing around the powerful vice president had been pushing to oust Guzman.
“(The president) has lost another piece of his board, perhaps the most important, and is increasingly alone,” Fornoni said.
Guzman tellingly posted his resignation letter while Fernandez de Kirchner was giving a speech commemorating iconic former Argentine President Juan Domingo Peron.
Guzman said “there should be a political agreement within the governing coalition” to choose his successor.
The president’s office said that it did not yet know when a replacement for Guzman would be announced.
A government source who asked to remain anonymous told Reuters that Guzman’s exit was due to what he felt was a lack of political support for his agenda.
Miguel Kiguel, former secretary of finance in Argentina, told Reuters that whoever takes over will have a tough time, noting that inflation could hit 80 percent this year and there is a gap of nearly 100 percent between official and parallel currency exchange rates.
“We don’t know who’s coming, but this will be a very hot potato,” Kiguel said. “Whoever comes is going to have a very complicated time.”


Dubai firms board the metaverse to improve customer engagement

Dubai firms board the metaverse to improve customer engagement
Updated 02 July 2022

Dubai firms board the metaverse to improve customer engagement

Dubai firms board the metaverse to improve customer engagement
  • Realty major Damac has invested up to AED367 million to develop and monetize a metaverse

DUBAI: Top Dubai-based companies are racing against time to build metaverse or immersive virtual worlds to bolster their sales prospects and disrupt customer experiences in their respective industries.

Realty major Damac has invested up to AED367 million ($100 million) to develop and monetize a metaverse that could allow potential customers to check into their luxury properties virtually, choose an apartment, explore furniture options and toy with the paraphernalia on offer.

Called D-Labs, the metaverse platform will create digital replicas of their top projects, including Damac Hills, Damac Lagoons, Safa by De Grisogono, and Cavalli Tower in Dubai. It will also host other notable projects such as Damac Tower Nine Elms in London and the upcoming Cavalli Residences in Miami.

So, how does this work? First, a potential customer in any part of the world can meet up with the sales agent of Damac Properties inside the metaverse instead of connecting over a Zoom call. Then, inside the metaverse, the prospect can tour the apartment and pay for the unit during the checkout.

“We sell around AED100 million monthly over Zoom calls without any immersive technology. With the metaverse, we can sell AED700-800 million a month to any customers in California, New York or Miami,” Ali Sajwani, general manager of operations at Damac and CEO of D-Labs, told Arab News.

The company, which has been annually clocking a business of $5 billion in real estate, expects to rake in $6.5 billion a year using the metaverse, added Sajwani.

We sell around AED100 million monthly over Zoom calls without any immersive technology. With the metaverse, we can sell AED700-800 million a month to any customers in California, New York or Miami.

Ali Sajwani, general manager of operations at Damac

Potential to disrupt

Metaverse owes much of its success to its disruptive nature that displaces traditional ways of looking at a category and creates a new business model. Gone are the days when real estate buyers would close deals based on brochures and project plans.

Instead, they are not only engaging in real-time with the property, but they now have the option to shop for things during their virtual tours. In the case of D-Labs, customers could also pick a host of non-fungible tokens or scarce digital objects on offer and sell them for a better price on a future date. The company, for instance, will soon be offering a variety of NFTs, including digital wearables and jewelry.

“The idea is you own your real estate and virtual assets. As part of our De Grisogono relaunch, we will also be offering digital jewelry. However, the goal is to convert that customer into an owner of real assets, not just digital ones,” Sajwani said.

According to management consulting firm McKinsey & Co., more than $120 billion have been globally invested in building metaverse technology and infrastructure in the first five months of 2022. That’s more than double the $57 billion invested in 2021.

The company recently surveyed more than 3,400 consumers worldwide and found two-thirds are excited about transitioning everyday activities to the metaverse, especially when it comes to connecting with people, exploring virtual worlds, and collaborating with remote colleagues.

“Our bottom-up view of consumer and enterprise use cases suggests it (metaverse) could generate up to $5 trillion in impact by 2030,” said Eric Hazan, senior partner of McKinsey in the study.

Strategy in motion

To make this groundbreaking concept a reality, Dubai ruler Sheikh Mohammed bin Rashid Al-Maktoum recently announced the Dubai Metaverse Strategy, which aims to increase the contribution of the metaverse sector to the emirate’s economy to $4 billion by 2030.

Given the government’s proactive role, companies are now looking at ways to develop metaverse platforms that could launch pilot activities, study consumer behavior, learn from the real-time interactions and nurture the business model.

Emirates Airline, another early adopter of the metaverse, also announced that it would soon offer a slice of immersive technology, where the customer could virtually relish the travel experience aboard the premium airline.

“These projects will allow customers to transform their entire processes, whether it’s a business operation, training, or sales force, into an interactive experience in the metaverse,” said Emirates Chief Operating Officer Adel Ahmed Al-Redha during a press roundtable.

These projects will allow customers to transform their entire processes, whether it’s a business operation, training, or sales force, into an interactive experience in the metaverse.

Adel Ahmed Al-Redha, Emirates chief operating officer

As part of its metaverse offerings, the customer can tour the aircraft and experience economy, business, and first class, besides selecting their seats and the food and beverage of their choice.

“The customers can also tour the airport, do their duty-free shopping and buy their items while sitting at home, which can be delivered to them at home or in the aircraft,” he added.

It wasn’t a new idea for Emirates to digitize. Still, they did not have the technology to do so and are currently cooperating with different technology companies “to ensure we get the right thing,” Al-Redha said.

Al-Redha is among the league of forward-looking business executives reaping the fruits of the first-mover advantage. It will be interesting to see how they use this fresh produce technology to disrupt their business models and create newer avatars of consumer engagement.


Exxon signals operating profits could double over Q1

Exxon signals operating profits could double over Q1
Updated 02 July 2022

Exxon signals operating profits could double over Q1

Exxon signals operating profits could double over Q1
  • Energy prices have shot up this year with oil selling for more than $105 per barrel

HOUSTON: Exxon Mobil Corp. has signaled that skyrocketing margins from fuel and crude sales could generate a record quarterly profit, according to a securities filing.

Energy prices have shot up this year with oil selling for more than $105 per barrel and gasoline at about $5 per gallon in the United States. The enormous earnings are likely to ignite new calls for windfall profit taxes.

The largest US oil producer projected a sequential increase of about $7.4 billion in operating profits compared with the first quarter. In the first quarter, Exxon posted an $8.8 billion profit, excluding a Russia writedown.

The filing indicates a potential profit of more than $16 billion for the second quarter. The company’s peak quarterly profit was $15.9 billion in 2012.

The filing showed Exxon expects higher oil and gas prices will add about $2.9 billion to results. Margins from selling gasoline and diesel will add another $4.5 billion to operating profits.

“High energy prices are largely a result of underinvestment by many in the energy industry over the last several years and especially during the pandemic,” Exxon said in a statement on the profit gains.

Analysts tracked by IBES Refinitiv forecast a per share profit of $2.99, up from $1.10 in the same quarter a year ago. Official results for the period will be released on July 29, according to a summary of factors influencing the period disclosed late Friday.

Exxon’s profits led US President Joe Biden last month to say the company and other oil majors were capitalizing on a global oil supply shortage to fatten profits.

The company said it is investing more than any other producer in the US to expand oil and natural gas production, including in the Permian, the country’s largest unconventional basin.

US Representative Ro Khanna said Exxon’s record-breaking profits reinforce his call for Congress to pass a windfall tax on Big Oil.

“Big Oil companies should be providing relief to their customers, not pouring billions into stock buybacks to enrich their investors,” he said in a statement.

Exxon’s shares closed up 2.2 percent at $87.55 on Friday.

Exxon, which lost more than $22 billion in 2020, has been using the extra cash from higher energy prices sales to pay debt and raise distributions to shareholders. It plans to buy back up to $30 billion of its shares through 2023.

Despite losses during the pandemic, Exxon continued to invest in additional production and expects to increase output in the Permian by 25 percent in 2022, the company’s spokesperson said.

The second-quarter results will be the first quarterly earnings report since Exxon decided to report results by four business units, giving a more detailed breakout of its petrochemical operations. The snapshot showed that margins in its chemical and specialty products units were flat in the second quarter compared with the first.

The company estimated the impact of exiting Russia would cut oil and gas profits by about $150 million compared with the first quarter. Exxon wrote down $3.4 billion in Russia assets earlier this year.

Exxon also signaled a contribution of about $300 million from asset sales in the quarter.


Stuck bags add to tangles at Paris airports amid travel boom

Stuck bags add to tangles at Paris airports amid travel boom
Updated 02 July 2022

Stuck bags add to tangles at Paris airports amid travel boom

Stuck bags add to tangles at Paris airports amid travel boom
  • Union activists said many more passengers flew without their bags
  • The scene at Charles de Gaulle on Saturday was busy but typical for the first weekend in July

PARIS: Airlines worked Saturday to deliver luggage to passengers around the world after a technical breakdown left at least 1,500 bags stuck at Paris’ Charles de Gaulle airport, the latest of several tangles hitting travelers this summer.
The airport’s baggage sorting system had a technical malfunction Friday that caused 15 flights to depart without luggage, leaving about 1,500 bags on the ground, according to the airport operating company. The airport handled about 1,300 flights overall Friday, the operator said.
Union activists said many more passengers flew without their bags, apparently because of knock-on effects from the original breakdown.
It came as airport workers are on strike at French airports to demand more hiring and more pay to keep up with high global inflation. Because of the strike, aviation authorities canceled 17 percent of flights out of the Paris airports Friday morning, and another 14 percent were canceled Saturday.
Passengers on canceled flights were alerted days ahead of their flights. The scene at Charles de Gaulle on Saturday was busy but typical for the first weekend in July, when France’s summer travel season kicks off.
Unions plan to continue striking Sunday but no flights have been canceled so far. They have threatened to renew the strike next weekend if negotiations with company management don’t succeed in finding a compromise.
Until now, French airports had been largely spared the chaos seen recently at airports in London, Amsterdam and some other European and US cities. Airlines and airports that slashed jobs during the depths of the COVID-19 crisis are struggling to keep up with soaring demand as travel resurges after two years of virus restrictions.


Oil prices up 2 percent on supply outages

Oil prices up 2 percent on supply outages
Updated 01 July 2022

Oil prices up 2 percent on supply outages

Oil prices up 2 percent on supply outages

LONDON: Oil prices rose about 2 percent on Friday, recouping most of the previous session’s declines, as supply outages in Libya and expected shutdowns in Norway outweighed expectations that an economic slowdown could dent demand, according to Reuters.

Brent crude futures were up $2.20, or 2 percent, at $111.23 a barrel by 1348 GMT, having dropped to $108.03 a barrel earlier in the session.

WTI crude futures gained $2.25, or 2.1 percent, to $108.01 a barrel, after retreating to $104.56 a barrel earlier.

Both contracts fell around 3 percent on Thursday, ending the month lower for the first time since November.

We “still see risks to prices as skewed to the upside on tight inventories, limited spare capacity and muted non-OPEC+ supply response,” Barclays said in a note.

Libya’s National Oil Corporation declared force majeure on Thursday at the Es Sider and Ras Lanuf ports as well as the El Feel oilfield. Force majeure is still in effect at the ports of Brega and Zueitina, NOC said.

Production has seen a sharp decline, with daily exports ranging between 365,000 and 409,000 bpd, a decrease of 865,000 bpd compared to production in “normal circumstances,” NOC said.

Elsewhere, 74 Norwegian offshore oil workers at Equinor’s Gudrun, Oseberg South and Oseberg East platforms will go on strike from July 5, the Lederne trade union said on Thursday, likely halting about 4 percent of Norway’s oil production.

Ecuador’s government and indigenous groups’ leaders on Thursday reached an agreement to end more than two weeks of protests which had led to the shut-in of more than half of the country’s pre-crisis 500,000 bpd oil output.

On Thursday, the OPEC+ group of producers, including Russia, agreed to stick to its output strategy after two days of meetings. However, the producer club avoided discussing policy from September onwards.

Previously, OPEC+ decided to increase output each month by 648,000 barrels per day in July and August, up from a previous plan to add 432,000 bpd per month.

US President Joe Biden will make a three-stop trip to the Middle East in mid-July that includes a visit to Saudi Arabia, pushing energy policy into the spotlight as the United States and other countries face soaring fuel prices that are driving up inflation.

Biden said on Thursday he would not directly press Saudi Arabia to increase oil output to curb soaring prices when he sees the Saudi king and crown prince during a visit this month.

A Reuters survey found that OPEC pumped 28.52 million bpd in June, down 100,000 bpd from May’s revised total.

Oil prices are expected to stay above $100 a barrel this year as Europe and other regions struggle to wean themselves off Russian supply, a Reuters poll showed on Thursday, though economic risks could slow the climb.

India introduced export duties on gasoil, gasoline and jet fuel on Friday to help maintain domestic supplies, while also imposing a windfall tax on oil producers who have benefited from higher global crude oil prices.