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Why should UAE investors remain bullish on crypto market in 2025?

Absence of taxes on cryptocurrency gains is a major plus for investors

Published: Sun 5 Jan 2025, 7:22 PM

By
Issac John

A woman takes a selfie near Christmas season decorations with a sign displaying the Bitcoin logo in San Salvador. — Reuters

The outlook for cryptocurrencies in 2025 is promising, particularly in the UAE, which stands out as a leading destination for crypto investors due to its favourable tax conditions and progressive regulatory environment.

According to Crypto market experts, one of the most attractive aspects of the UAE for crypto investors is the absence of taxes on cryptocurrency gains. This policy has attracted both local and international investors, making it an optimal location for crypto trading and investment.

Experts believe that as regulatory clarity improves, institutional investors are likely to increase their exposure to cryptocurrencies in the UAE. This inflow of capital will not only stabilize the market but also enhance the legitimacy of digital assets.

Sajith Kumar PK, CEO and managing director of IBMC Financial Professionals Group, said the UAE has positioned itself as a global hub for cryptocurrencies and blockchain technology. As the global market continues to evolve, the UAE’s proactive approach to innovation and regulation positions it well for future growth. “The combination of increased institutional investment, a burgeoning startup ecosystem, and enhanced public adoption will likely drive the UAE to the forefront of the cryptocurrency landscape.”

However, Kumar warns that investors and stakeholders should remain vigilant as the crypto market is inherently volatile and subject to rapid changes. “With the right strategies and frameworks in place, the UAE could very well become a global leader in the cryptocurrency space by 2025.”

The UAE has established a progressive regulatory framework through entities like the Virtual Assets Regulatory Authority (Vara), the Dubai Financial Services Authority (DFSA) and the Abu Dhabi Global Market (ADGM). These bodies provide a clear legal framework for crypto businesses, fostering innovation while ensuring consumer protection.

Globally, this year is expected to be a stellar year for the crypto industry due to a more favourable regulatory environment promised by US president-elect Donald Trump. Investors are hoping Congress will pass its first ever crypto focused legislation, which could be centered around stablecoins or market structure.

Vijay Valecha, chief investment officer, Century Financial, said Bitcoin steadied on Thursday after falling sharply in the last week of 2024 as traders fretted over the regulatory outlook for crypto under incoming President Donald Trump.

The world’s largest cryptocurrency rose 1.8 per cent to $95,469.5, after falling as low as $92,000 in the past week, said Valecha.

H.C. Wainwright on Thursday said bitcoin is expected to reach $225,000 per coin by the end of 2025 — up from its prior forecast for $145,000.

Traders are also keen to see the crypto public equity markets open up with more initial public offerings.

Experts said the UAE’s favourable business environment, coupled with access to venture capital, will likely lead to a surge in crypto startups. They expect innovative projects focusing on decentralised financial services, along with NFTs and blockchain solutions tailored to local and regional markets.

They expect the UAE to continue refining its regulatory framework to keep pace with global standards while maintaining its competitive edge. This may involve collaborations with international regulatory bodies to align policies and ensure compliance, crypto experts said.

“As the UAE continues to promote digital transformation, public adoption of cryptocurrencies is expected to rise. With more businesses accepting crypto payments and the proliferation of user-friendly wallets, everyday transactions using digital currencies may become commonplace,” Kumar said.

Despite the positive outlook, market analysts see challenges such as regulatory changes, market volatility, and security concerns. The government will need to address these issues proactively to maintain investor confidence and market stability, they said.