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.
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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.
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.
“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.
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
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.