Dubai businesses embrace crypto as the future of payments

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Updated 01 May 2022

Dubai businesses embrace crypto as the future of payments

Dubai businesses embrace crypto as the future of payments
  • There is a possibility that the digital ecosystem in the UAE is set for bigger things

DUBAI: If you thought that the worldwide media coverage of Dubai’s new crypto laws announced in March was a blip on the radar screen, wait until you see the frenzy with which traditional shops and institutions are embracing digital currencies.

Close on the heels of several global crypto exchanges bagging commercial licenses and moving headquarters to Dubai, a motley mix of neighborhood establishments have opened its doors to people willing to lighten their wallets with bitcoin and the like.

Situated in Al-Quoz, Bake N More is a coffee and pastry shop that will go down in local history as the first cafe in Dubai to accept cryptocurrency from its customers. While the cafe still accepts cash and credit cards, it welcomes a mixed bag of digital payments, including Bitcoin, Ethereum and Tether.

“There’s been tremendous interest in cryptos because people see this as the future payment gateway system, especially those who have held on to them for a long time and are now looking to cash them,” Mohammad Al-Hammadi, owner of Bake N More, told Arab News.

The contemporary cafe’s open-source payment platform is handled by Mixin Network, a lightning-fast and decentralized platform that brings speed and scalability to blockchain and facilitates the transfer of digital assets.

Explaining the payment system to Arab News, Al-Hammadi said that it would charge customers by converting the cost of an item into its value in cryptocurrency. For instance, if a bottle of water costs 5 dirhams ($1.36), the price payable in TerraUSD, a Stablecoin built on the Terra blockchain, would be about 1.36UST as it is pegged 1:1 against the US dollar.




Mohammad Al-Hammadi, owner of Bake N More

New school of thought

The emergence of cryptocurrency as a mainstream tender has also invited the attention of Citizens School, an educational institution situated in the plush Al-Satwa locality. Come September, the UK-curriculum non-selective school will let parents pay the tuition fees in Bitcoin
and Ethereum.

“The reason we are accepting crypto payments is to start a conversation among parents and children about the technology that will influence the lives of the young generations,” said Hisham Hodroge, CEO of Citizens School.

He further added that nearly 10 percent of the parents who have enrolled their children opted to pay in cryptocurrency. The 43,000 sq. m. school campus has a capacity for 2,600 children, and fees range from 36,000 dirhams for Early Years Foundation Stage 1 up to 52,000 dirhams for Year 6.

HIGHLIGHTS

• Situated in Al-Quoz, Bake N More is a coffee and pastry shop that will go down in local history as the first cafe in Dubai to accept cryptocurrency from its customers. While the cafe still accepts cash and credit cards, it welcomes a mixed bag of digital payments, including Bitcoin, Ethereum and Tether.

• The contemporary cafe’s open-source payment platform is handled by Mixin Network, a lightning-fast and decentralized platform that brings speed and scalability to blockchain and facilitates the transfer of digital assets.

• The emergence of cryptocurrency as a mainstream tender has also invited the attention of Citizens School, an educational institution situated in the plush Al-Satwa locality.

“A while ago, cryptocurrency was only a floating term among well-versed investors. However, today cryptocurrency is becoming much more mainstream, reshaping the traditional financial system,” said Adil Alzarooni, founder of Citizens School, in a statement.

Not too long ago, even investment circles barely knew about the dark alleys of the deep web, the seedy corner of the Internet that offers anything from criminal services to cracked credentials to counterfeit money for instant exchange of cryptocurrency.

But the instrument soon gained legitimacy when the investment community began counting on it to hedge risk against rising inflation. The outcome was bizarre because it led to an exponential rally that led Bitcoin to touch a dizzying height of over $68,000 in November 2021. Just five years ago, a single Bitcoin was worth about $700. The meteoric rise became a talking point across the treasury benches globally.




Hisham Hodroge, CEO of Citizens School

Crypto penetration in UAE

According to blockchain data platform Chainalysis, the UAE, estimated to be the third-largest crypto market in the Middle East after Turkey and Lebanon, totaled a transaction value of $26 billion between July 2020 and June 2021. Sovereign governments were left with no choice but to reign over the volatility and tame the beast.

Early this year, the UAE announced a licensing program that would bring it into the league of rival financial centers such as Singapore and Hong Kong.

Last month, the state passed its first crypto law and established a regulatory body to oversee virtual assets.

The government set up the Dubai Virtual Assets Regulatory Authority to oversee the regulation, governance and licensing of cryptocurrencies, non-fungible tokens and other virtual assets. The decision led to a massive influx of global crypto exchanges in the region.

Cryptocurrency exchange Bybit announced its plans to move its headquarters from Singapore to Dubai. Global behemoths such as FTX and Binance received licenses to operate in the city. Crypto.com has revealed its intention to set up its regional office in the city.

“Countries like the UAE have already created governing bodies to measure and promote the growth of virtual assets. It’s keeping itself ahead of most of the world in developing the crypto market,” said Emma McInnes, global sector head of financial services at YouGov, a UK-based market research and data analytics firm.

YouGov recently released a report titled “The Future of Financial Services” based on the sample size of 1,012 in the UAE. The study revealed that 67 percent of UAE residents were interested in investing in cryptocurrencies within the next five years, and 21 percent intended to trade in the next 12 months.

“Like all businesses started using the Internet 20 years ago, they will start using crypto now; it is inevitable,” said Talal Tabbaa, CEO of CoinMENA, a digital assets exchange licensed by the Central Bank of Bahrain.

Salaries in Crypto?

The company recently set up a payment platform for Dubai-based online convenience store Yalla Market that claims to deliver groceries in 15 minutes. The store accepts USD Coin and Tether. What makes the store interesting is that besides launching a new payment method for its customers, the startup is also considering paying salaries via digital assets in the future.

“We can now see that the world is increasingly adopting blockchain and cryptocurrency technologies. We could not stand aside as a company based in the UAE,” said Leo Dovbenko, CEO and co-founder of Yalla Market, in a statement.

The message is loud and clear: Crypto is here to stay, but there is a strong possibility that the crypto ecosystem in the UAE is set for bigger things. However, that is a story for another day.


World Economic Forum to return in-person as it aims to shed light on ‘History at a Turning Point’

World Economic Forum to return in-person as it aims to shed light on ‘History at a Turning Point’
Updated 18 May 2022

World Economic Forum to return in-person as it aims to shed light on ‘History at a Turning Point’

World Economic Forum to return in-person as it aims to shed light on ‘History at a Turning Point’
  • This year’s meeting will bring together about 2,500 leaders and experts from around the world, including more than 50 heads of state and government, more than 1,250 leaders from the private sector and nearly 100 Global Innovators and Technology Pioneers

LONDON: The World Economic Forum announced on Wednesday that the theme of its annual meeting for 2022 will be ‘History at a Turning Point: Government Policies and Business Strategies’ in its return to an in-person conference since the pandemic forced it to go virtual since 2020.

“The Annual Meeting is the first summit that brings global leaders together in this new situation characterized by an emerging multipolar world as a result of the pandemic and war,” said Klaus Schwab, the WEF’s founder and executive chairman.

This year’s meeting — which is happening in the spring rather than its usual January slot — returns after a two-year hiatus and will bring together about 2,500 leaders and experts from around the world, including more than 50 heads of state and government, more than 1,250 leaders from the private sector and nearly 100 Global Innovators and Technology Pioneers.

“The fact that nearly 2,500 leaders from politics, business, civil society and media come together in person demonstrates the need for a trusted, informal and action-oriented global platform to confront the issues in a crisis-driven world,” Schwab said.

Civil society will be represented by more than 200 leaders from NGOs, social entrepreneurs, academia, labour organizations, faith-based and religious groups, and at least 400 media leaders and reporting press. The Annual Meeting will also bring together younger generations, with 100 members of the Forum’s Global Shaper and Young Global Leader communities participating.

Against a backdrop of the global pandemic, the Russian invasion of Ukraine and geo-economic challenges, the meeting convenes at a strategic point where public figures and global leaders will meet in person to reconnect, exchange insights, gain fresh perspectives and advance solutions.

Topics that will be discussed at the annual meeting range from COVID-19 and climate change to education, technology and energy governance.

These include the Reskilling Revolution, an initiative to provide 1 billion people with better education, skills and jobs by 2030; an initiative on universal environmental, social and governance (ESG) metrics and disclosures to measure stakeholder capitalism; and the One Trillion Trees initiative, 1t.org, to protect our trees and forests and restore the planet’s ecosystems.

The programme will have six thematic pillars, including fostering global and regional cooperation; securing the economic recovery and shaping a new era of growth; building healthy and equitable societies; safeguarding climate, food and nature; driving industry transformation, and finally; harnessing the power of the Fourth Industrial Revolution.


Egypt unveils plan to expand private sector

Egypt unveils plan to expand private sector
Updated 18 May 2022

Egypt unveils plan to expand private sector

Egypt unveils plan to expand private sector

CAIRO: Egypt’s government has identified activities it will withdraw from or reduce its presence in over the next three years as part of a plan to expand the private sector, according to a draft document circulated in local media.

Egypt’s economy has been jolted by the impact of the war in Ukraine, and it is in talks over a new loan program with the IMF.

The government says it aims to offer assets to private investors to attract $40 billion over the next four years, and to boost private investment.

Previous privatization plans have been repeatedly postponed, partly due to market turbulence and legal and bureaucratic hurdles.

HIGHLIGHTS

The government planned to reduce its holdings in the textile industry by 90%, the mining industry by 40%, the chemical industry by 75%, and the food processing industry by 73%.

Areas the government intends to exit within three years include the grains sector with the exception of wheat, port construction, manufacture of fertilizers, and water desalination plants.

According to the document, areas the government intends to exit within three years include the grains sector with the exception of wheat, port construction, manufacture of fertilizers, and water desalination plants.

Areas where it may reduce its presence include power generation, pre-school education, textile manufacturing, the management, maintenance and operation of metro lines, and mining and quarrying.

Areas where the state may increase its presence include the construction of railways and metro lines, operation of the Suez Canal and financial brokerage and insurance activities. The government may enlist the private sector to participate.

Some economic sectors appear in more than one category.

The document said the government planned to reduce its holdings in the textile industry by 90 percent, the mining industry by 40 percent, the chemical industry by 75 percent, and the food processing industry by 73 percent.

Central Bank Gov. Tarek Amer said no agreement had been reached about the size of the IMF deal.

“It will not be a big amount as Egypt has so far taken a big allocation,” Amer told reporters on Wednesday. “We tap the IMF to benefit in terms of structural reforms.”


Macro Snapshot — UK inflation hits 40-year high of 9%; US housing starts fall in April

Macro Snapshot — UK inflation hits 40-year high of 9%; US housing starts fall in April
Updated 18 May 2022

Macro Snapshot — UK inflation hits 40-year high of 9%; US housing starts fall in April

Macro Snapshot — UK inflation hits 40-year high of 9%; US housing starts fall in April

RIYADH: Britain’s inflation hit a staggering 40-year high as the war in the east continues, while the US’ housing dropped slightly in April and was accompanied by a plunge in building permits which posed a challenge for  entry-level and first time buyers in terms of affordability.

UK inflation 

British inflation surged last month to its highest annual rate since 1982, pressuring Finance Minister Rishi Sunak to offer more help for households and the Bank of England to keep raising interest rates despite a risk of recession.

Consumer price inflation hit 9 percent in April, the Office for National Statistics said on Wednesday, surpassing the peaks of the early 1990s recession that many Britons remember for sky-high interest rates and widespread mortgage defaults.

Britain has the highest inflation of Europe’s big economies and almost certainly in the Group of Seven, with Canada and Japan yet to report April data. Neither are likely to match Britain’s price growth which also looks set to be longer-lasting.

Last month, the IMF forecast Britain in 2023 faced slower economic growth and more persistent inflation than any other major economy.

Soaring energy bills were the biggest inflation driver, reflecting April’s increase in regulated energy tariffs. Knock-on effects from Russia’s invasion of Ukraine mean those bills are likely to jump again in October.

“We cannot protect people completely from these global challenges but are providing significant support where we can, and stand ready to take further action,” Sunak said.

A Reuters poll of economists had pointed to a reading of 9.1 percent, up from 7 percent in March, and sterling fell.

A survey on Tuesday showed two in three people had kept their heating off when they would normally have turned it on, almost half were driving less or changing supermarkets and just over a quarter say they have skipped meals. 

US housing starts fall in April

US homebuilding fell moderately in April, but a sharp decline in permits pointed to a slowdown in the housing market amid rising mortgage rates, which are contributing to reducing affordability for entry-level and first-time buyers.

Housing starts slipped 0.2 percent to a seasonally adjusted annual rate of 1.724 million units last month, the Commerce Department said on Wednesday. Data for March was revised lower to a rate of 1.728 million units from the previously reported 1.793 million units. Economists polled by Reuters had forecast starts declining to a rate of 1.765 million units.

Permits for future homebuilding dropped 3.2 percent to a rate of 1.819 million units.

A survey on Tuesday showed the National Association of Home Builders/Wells Fargo Housing Market sentiment index dropped to the lowest level in nearly two years in May.

Builders blamed the fifth straight monthly decline in sentiment on soaring prices for building materials as well as rapidly rising mortgage rates, which were squeezing entry-level and first-time home buyers from the market.

Chile’s economy grows 

Chile’s economy expanded 7.2 percent in the first quarter of 2022 from a year earlier, central bank data showed on Wednesday, fueled by growth in the services and retail sectors.

That is below expectations for a 7.9 percent increase, according to a Reuters poll of analysts and economists.

Gross domestic product fell 0.8 percent from the previous three months in seasonally adjusted terms, versus a forecast 0.4 percent drop.

“A large part of the activities registered positive figures, with the biggest gains in service activities — in particular, personal, transport and business — and in retail,” the central bank said.

Mining, agriculture, forestry, and fishing activities all declined, the bank added.

Japan’s economy contracts 

Japan’s economy shrank an annualized 1 percent in January-March from the previous quarter, government data showed on Wednesday, falling slightly less than expected as private consumption showed resilience despite resurgent coronavirus cases.

The gross domestic product figure translated into a quarterly drop of 0.2 percent, compared with a median market forecast of a 0.4 percent contraction, the Cabinet office data showed.

Private consumption, which makes up more than half of the economy, came in nearly flat versus a 0.5 percent fall expected by economists, the data showed.

Spain’s economic outlook

The Spanish economy could grow around 4 percent in 2022, half a percentage point less than expected in April, as rising inflation hurts consumer confidence and international trade slows, the Bank of Spain said on Wednesday.

The lower envisaged growth rate would bring it in line with the downwards revision this week from the European Commission. It had previously forecast a 5.6 percent GDP rise for Spain.

In April, the Spanish central bank had already lowered its economic growth outlook for this year and next due to the impact of inflation stoked by Russia’s invasion of Ukraine and forecast inflation would soar to 7.5 percent in 2022. 

China growth forecast

Analysts at Goldman Sachs said on Wednesday they were lowering their China 2022 GDP forecast to 4 percent from 4.5 percent as a result of pandemic-related damage to the economy in the second quarter of this year.

It was more likely China’s economy would undershoot than overshoot their target, they added.

“Even this lower growth projection embeds the assumption that COVID-19 is mostly under control going forward, the property market improves from here, and the government provides substantial policy offset through infrastructure spending in coming months,” they wrote.

China’s retail and factory activity fell sharply in April as wide COVID-19 lockdowns confined workers and consumers to their homes and severely disrupted supply chains. 

(With input from Reuters) 

 

 


Oil falls 2% as US refiners ramp up output

Oil falls 2% as US refiners ramp up output
Updated 18 May 2022

Oil falls 2% as US refiners ramp up output

Oil falls 2% as US refiners ramp up output

HOUSTON: Oil prices reversed course and fell over 2 percent on Wednesday after government data showed US refiners ramped up output, easing worries of a supply crunch, and as traders took cues from a drop in equities market.

Brent crude was down $2.41 cents, or 2.4 percent, at $109.52 a barrel at 12:05 a.m. ET (1605 GMT), while US West Texas Intermediate  crude fell $2.5 cents, or 2.2 percent, to $1 09.85 a barrel.

Brent settled below WTI on Tuesday — the first time since May 2020 — and was still unusually trading at a discount due to strong export demand and tightening US crude stockpiles.

US crude inventories fell by 3.4 million barrels last week, government data said, an unexpected drawdown as refiners ramped up output in response to tight product inventories and near-record exports that have forced diesel and gasoline prices to record levels in the US.

Capacity use on both the East Coast and Gulf Coast was above 95 percent, putting those refineries close to their highest possible running rates.

“While on the face of it, the report was extraordinarily bullish, they (refiners) are racing to put more refined product on the market... there’s obviously a refiners response,” said John Kilduff, a partner at Again Capital LLC.

Both benchmarks also gave up earlier gains of $2-$3 a barrel following a change in risk sentiment as equity markets fell, said UBS analyst Giovanni Staunovo.


PIF-backed Lucid Motors to set up first overseas production factory in Saudi Arabia

PIF-backed Lucid Motors to set up first overseas production factory in Saudi Arabia
Updated 18 May 2022

PIF-backed Lucid Motors to set up first overseas production factory in Saudi Arabia

PIF-backed Lucid Motors to set up first overseas production factory in Saudi Arabia
  • The Saudi Industrial Development Fund financed the project with $1.3 billion

JEDDAH: US-based Lucid Motors signed agreements on Wednesday to build a production factory in Saudi Arabia with an annual capacity of 155,000 zero-emission electric vehicles.

The deals are estimated to provide financing and incentives to Lucid up to $3.4 billion in total over the next 15 years to build and operate the manufacturing facility in the Kingdom.

To be located in King Abdullah Economic City, AMP-2 is the Public Investment Fund-backed electric vehicle manufacturer’s first production facility outside the US, according to a statement. 

This project demonstrates the confidence investors have in Saudi Arabia’s competitiveness.

Khalid Al-Falih

The Saudi Industrial Development Fund financed the project with SR5 billion ($1.3 billion), said Bandar Alkhorayef, the minister of industry and mineral resources. 

The project is expected to create over 4,500 jobs in KAEC, said Cyril Piaia, CEO of Emaar The Economic City, master developer of KAEC. 

Saudi government and Lucid Motor’s officials at a ceremony to sign agreements for the development of a production facility in the Kingdom. AN photo

“We have a technology-based factory, we will bring thousands of high-tech jobs to the Kingdom,” Peter Rawlinson, CEO of Lucid Motors, said. 

“Attracting a global leader in electric vehicles such as Lucid to open its first international manufacturing plant in Saudi Arabia reflects our commitment to creating long-term economic value in a sustainable, enduring, and globally integrated way,” Saudi Investment Minister Khalid Al-Falih said. 

FASTFACTS

About 85 percent of the manufacturing plant will be located in King Abdullah Economic City.

The factory’s production will be exported.

The project is expected to create over 4,500 jobs in KAEC.

“This project demonstrates the confidence investors have in Saudi Arabia’s competitiveness, its ability to create opportunity, and serve global demand for a highly complex product such as electric vehicles,” Al-Falih added. 

About 85 percent of the factory’s production will be exported, reflecting Saudi Arabia’s competitive location and abilities, AlKhorayef said. 

The agreements were signed between the Saudi Investment Ministry, the Saudi Industrial Development Fund, Emaar, The Economic City, at King Abdullah Economic City and the Gulf International Bank.