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UAE to see rapid growth in cryptocurrency activities

The Abu Dhabi Global Market (ADGM) has so far 11 fully licensed and approved in-principle virtual asset players in its community.

The UAE known to be at forefront of innovation and emerging technologies will witness more global players descend in desert to set up their operations in cryptocurrency and its related activities giving investors wider choice to choose the exchanges.

With top global names like Binance and Bybit already making regional presence the investor sentiment is surely at peak with nation witnessing disruptive investment options.

The Abu Dhabi Global Market (ADGM) has so far 11 fully licensed and approved in-principle virtual asset players in its community.

“Since ADGM introduced its virtual assets guidelines in 2017 and launched the world’s first fully comprehensive virtual assets regulatory framework and regime in 2018, we have seen a growing number of local, regional, and global players anchoring their presence and providing virtual assets activities and related services in Abu Dhabi, the UAE, and across Mena. This, in turn, attracted a heightened level of retail and institutional investors’ interest and investment. In addition, ADGM has also earlier introduced its regulatory sandbox and fintech Digital Lab to encourage and assist fintech firms in testing their products in a “live” environment, and also to ensure that its fintech firms understand and comply with the UAE’s rigorous AML and KYC compliance standards,” said ADGM spokesperson.

Currently ADGM is also seeking market feedback on its proposed enhanced virtual asset framework and allowing regulated multilateral trading facility (MTF) or custodian groups within ADGM to conduct non-fungible token (NFT) activities. “Over the years, the UAE has also doubled its efforts to provide a supportive environment and regulatory framework for digital assets and blockchain, prioritising bringing virtual assets activities and investment to the UAE and advocating the innovation and adoption of blockchain. Such strategic and collective efforts have drawn in new players and more investors to the UAE and the wider region,” added the ADGM spokesperson.

Recently, The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has issued a discussion paper on DeFi, in order to engage with industry practitioners and other stakeholders to explore the potential opportunities arising from decentralised finance (DeFi), associated risks and what a future regulatory framework may resemble.

Emmanuel Givanakis, CEO of the ADGM FSRA said: “DeFi is an emerging part of the global financial ecosystem that holds the promise of delivering more efficient and tailored financial services. In order to achieve this potential, the risks arising from DeFi must be identified and appropriately addressed. We are pleased to contribute our views on DeFi and its potential future direction to the ongoing discussion in the community, in association with industry practitioners. We also look forward to collaborating and starting a dialogue with the industry that will help us make informed policy choices to address these risks and thereby realise the potential benefits of DeFi and on any future regulatory developments.”

Toluna, an international online market research company, conducted a global study to understand consumers’ perceptions around cryptocurrency and interviewed 9,000 people between the ages of 18 and 64 from four regions and 17 countries, including the UAE.

The study showed that the overall outlook for investing in cryptocurrency in the UAE is much stronger compared to global markets. Almost 78 per cent of investors are expecting to increase the proportion allocated to investible assets for cryptocurrency investment in the UAE against 67 per cent in global markets.

The local market is also growing at an unprecedented rate as 16 per cent of all company registrations in DMCC (Dubai Multi Commodities Centre) in Q1 2022, were for crypto-related activities. The number of companies in the Crypto Oasis ecosystem edge closer to the targetted 1,000 before Q2, 2022.

It is reported that this year alone estimates of venture investment into the sector across the GCC will exceed $500 million. Currently, the digital economy contributes about 4.3 per cent of the GDP in the UAE, which is equivalent to Dh100 billion ($27 billion), according to the latest statistics from the Dubai chamber for Digital Economy.

Robin Philip, who heads leading Dubai consultants A&A Associate, says his company is ready for the big crypto upswing. “New businesses in Dubai are increasingly dealing with crypto assets and we had long anticipated this,” adds Philip, whose company last year became Sharjah Media Free Zone’s highest channel partner by helping set up over 2,500 companies across the UAE.

“These numbers are set to not only grow in 2022 but also look significantly different with many new investors, buoyed by UAE’s landmark visa reforms this week and new virtual assets regulations earlier this year, keener than ever before to start crypto operations here,” he adds.

— sandhya@khaleejtimes.com