Gold trader gets Dubai licence to trade and store cryptocurrencies

Dubai - The licence allows the company to store Bitcoin, Ethereum and other alternatives to the best-known digital currencies.

Dubai on Tuesday launched another innovative initiative by offering investors to store their cryptocurrencies in a vault located in the headquarters of the commodities free zone in the emirate.

Dubai-based Gold trader Regal RA DMCC has become the first company in the Middle East to be awarded a licence by the Dubai Multi Commodities Centre (DMCC) to trade in cryptocurrencies. The licence allows the company to store Bitcoin, Ethereum and other alternatives to the best-known digital currencies in a vault located in the DMCC headquarters.

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. Crypto-commodities are those that trade in Bitcoin.

"DMCC's crypto-commodities licence is for proprietary trading in crypto-commodities only. No initial coin offerings are permitted and no establishment of an exchange is permitted under this licence," a DMCC spokesperson said.

"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. The announcement today embodies this approach and will no doubt come as good news to the international cryptocurrency market," said Ahmed bin Sulayem, executive chairman, DMCC.

The Regal Assets security process involves generating offline blocks, using the specific crypto-commodity's blockchain derived algorithm. The key is then printed offline within the secured environment on a specialised wallet and placed in deep cold storage in the DMCC vault. Investors can purchase additional coins, or sell, at any time they wish.

"There has been an increasing trend in investing on cryptocurrencies in the last few years. The most popular way to buy and sell cryptocurrencies today is through an online exchange, where investors are susceptible to not just financial risks but also face threats from cyber criminals," Vinay Datta, founder and chief executive officer of ThinkAhoy.com, said.

He said the idea of safeguarding individual blocks of crypto-commodities offline in a cold storage with safety levels as that of gold assures that an investor is protected and builds a layer of trust on the system.

"Considering that the economy of the UAE is booming and that there are strict laws and methods in place to safeguard an investor, we could see a definite rise in crypto-commodity investments. In the long run, this will also stabilise cryptocurrencies as a channel of investment, which will in turn aid the flow of investments into the UAE once regulated," Datta explained.