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UAE: Could salaries be paid in cryptocurrency soon? Experts explain

Digital currencies are already being accepted by some countries.

As virtual assets increasingly gain currency in the UAE and worldwide, industry executives believe that more and more companies will pay salaries in cryptocurrencies and the industry will also be less volatile due to enhanced regulations and legal framework.

Digital currencies are already being accepted by some countries while a few technologies companies have been paying salaries to their employees in cryptos.

With Dubai also introducing legal framework and establishing an authority to regulate virtual assets, industry executives believe that it’s possible that the companies here will also pay salaries in digital currencies and residents paying utility bills and buying products through this new form of currency.

Abu Dhabi Global Markets (ADGM) was the first jurisdiction in the world to introduce a comprehensive and bespoke regulatory framework for the regulation of spot virtual asset activities, including those undertaken by multilateral trading facilities, brokers, custodians, asset managers and other intermediaries. Recently, Dubai also announced law for virtual assets and establishment of Dubai Virtual Asset Regulatory Authority (Vara), which has license to exchanges FTX and Binance of late.

Reflecting growing adoption of digital currencies in the UAE, Emirates Draw and YottaChain International Holding Limited (DIFC), which specialises in the decentralisation of data storage solutions, has signed an agreement that allows crypto holders to participate in the Emirates Draw. The first phase will allow payments in USDT, a well-known and stable token, through a decentralised application (dApp).

Jeetu Kataria, CEO at Digital Financial Exchange (DIFX), said an interesting factor is the rise of metaverse projects which all work and deploy their own cryptocurrencies.

“Recent events have also shown the world how crypto can be used in a charitable sense, which I believe not many had envisioned it could facilitate. Overall the growth of crypto is still at its beginning stage and the one thing I do believe is that it will become a mainstream form of investment for the general public,” he said.

Globally, Ukrainian government has raised $120 millions through digital assets to fund its military and legalise the sector in the country.

Growing adoption

The adoption of crypto has evolved rapidly where investors in the crypto industry grew by over 500 per cent in between 2018 and 2021.

Emmanuel Givanakis, CEO of the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM), noted that the use case for virtual assets, as well as the underlying blockchain or distributed ledger technology, will continue to expand moving forward.

“Considering the different types of use case, across payments, store of value, governance etc., it seems like it will be an interesting five years. Just as important, there is potential for the use case of blockchain across different types of financial services activities to increase as well, again across payments, but also custody, trading, settlement, etc.”

Mustafa Kheriba, executive chairman, Yoshi Markets, pointed out that knowledge, regulations, and ability to pay with crypto are a few factors that will accelerate the adoption of digital currencies.

UAE: Part salaries in cryptocurrencies

Considering the vast adoption of crypto, Kheriba believes that the current use case for virtual assets will evolve and expand.

He said salaries are already being paid in cryptocurrency in many countries such as New Zealand, Japan, UK, and in a lot of European countries like Denmark but it is still rare to pay out salaries in crypto as many people wouldn’t feel comfortable with it due to the lack of knowledge, limited avenues for usage and volatility of some currencies.

“We see more and more businesses offering to pay in crypto by the day and mayors in upcoming crypto hubs like Miami and New York looking into ways of paying salaries in cryptos as well as converting their whole personal salary into BTC. There may be a possibility that part of salaries in UAE could be paid in stable coins by some organisations considering UAE aims to increase the number of businesses operating in the virtual assets industry,” he added.

Jeetu Kataria of DIFX said some companies which are within the crypto services space already pay salaries in Bitcoin, USDT and Ethereum. But he suggested that a good way to integrate crypto in organisations would be to give employees the option to receive a certain percentage of their salaries in crypto.

Paying utility bills in crypto in UAE?

Of late, one of the growing acceptance of crypto has been on the payment of utility bills.

Mustafa Kheriba said digital currency is already being used to pay for utility bills in Germany, Romania, and New Zealand.

“You can also get a crypto debit card to pay your bills where your coins will be converted into fiat for a small transaction fee to pay bills. The high adoption phase and global government willingness to regulate crypto and even turn their currency into digital currencies are indicators that virtual assets as a means of payment could become widespread in many countries,” added Kheriba

Recently, Dhanu digital coin was launched by digital exchange Dhanu X in the UAE which allows its buyers to pay for utility and credit bills in India due to growing popularity of virtual currencies and assets.

Sachin Kumar, co-founder of digital exchange Dhanu X, said they have obtained one licence each from mainland and DMCC for commodities and portal. The exchange has been launched with five digital currencies and it will be increased to 15 in a month’s time. He said the usage of digital currencies is gaining currency in both the developing and developed world with Mauritius and UAE emerging some of the most friendly countries for virtual assets.

Jeetu Kataria of DIFX acknowledged that it’s an interesting concept as some utility providers in Germany, New Zealand and Romania accept Bitcoin as payment.

How to mitigate risks of volatility:

Cryptos are one of the most volatile assets, hence, retail investors need to be cautious and conduct a throughout due diligence before pumping their hard-earned money in this new mode of investment.

Jeetu Kataria CEO at DIFX, advised investors to conduct their proper due diligence behind each and every project. “Crypto is risky. People often tend to fall into scams and buy into things that are ‘trending’ and lose their hard-earned money. To mitigate risk, ensure that you have a diverse portfolio of projects you genuinely believe in.”

Emmanuel Givanakis said FSRA looks to mitigate volatility and risks via different mechanism.

“Exchanges are required to have the tools and controls within their markets to manage such risks. Secondly, the FSRA monitors these markets in real-time as well. Thirdly, only accepted virtual assets are allowed for use within ADGM, which require seven risk factors, controls, and tools that need to be tested and cleared to ensure that the virtual assets they use are capable of being monitored and are suitably connected with markets globally,” Givanakis said, adding that ADGM’s markets are a combination of both retail and institutional participants, allowing increased mitigation, and management of such volatility.

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Mustafa Kheriba of Yoshi Markets said regulatory guidelines and wider ownership of cryptocurrencies will decrease volatility in the market.

Richard Teng, regional head of Mena, Binance, encouraged investors and users do their own research before investing in crypto, taking into account their risk tolerance and invest within their financial means. “With greater institutional adoption and crypto gaining investment traction amongst financial institutions, corporates and family offices, we should see greater research and more informed decision which augur well for this space,” he said.

waheedabbas@khaleejtimes.com