DUBAI: Crypto has gone mainstream in a very short time as the Middle East region makes major strides in digital assets with a slew of new regulatory measures.
From luxury fashion to travel to art, crypto is gaining acceptance across various industries, indicating that these new forms of digital currencies are here to stay.
As this space gets bigger and bigger, it will continue to attract the attention of crypto enthusiasts.
Recognizing that these digital assets will only grow from here, the region is making the necessary progress by introducing new mandates.
Dubai, for example, passed a new law to regulate virtual assets such as bitcoin and non-fungible tokens, or NFTs, and created an entity called the Virtual Asset Regulatory Authority. These are clear steps to legitimize a fledgling industry and pave the way for growth.
“I see this as very positive news that will hopefully lead to mass adoption of digital assets in the region,” said Zina Ashour, co-founder and chief marketing officer of iOWN, a regional technology company that invests in the development of blockchain-based fintech solutions.
“It means regulators want to be part of the big move towards digitizing the financial sector through blockchain and cryptocurrency,” she said.
Similarly, FTX, a global crypto exchange, received an official license to operate in Dubai. This was closely followed by an operating license granted to Binance, one of the largest crypto providers in the world which also set up headquarters in the emirate.
This series of steps follows Dubai’s decision to launch the DMCC Crypto Center in June 2021. It was established as a comprehensive ecosystem for companies operating in the crypto and blockchain sectors.
The center is also expected to house a leading crypto consulting practice run by CV Labs, the entity behind the Swiss government-backed Crypto Valley. The valley has already spawned crypto leaders such as cardano and ethereum.
“Crypto and blockchain technologies have enormous potential to transform global commerce and supply chains. This is a key driver for the launch of DMCC Crypto Center,” said Ahmed bin Sulayem, Executive Chairman and Managing Director of DMCC, in a press release.
“With the DMCC Crypto Center providing a progressive and supportive regulatory environment, a strong pool of industry talent, and an ecosystem that provides access to capital, resources, and opportunity for crypto businesses, we are uniquely positioned to support businesses of cryptography around the world,” he added.
Industry experts say the growing interest of non-regional platforms in local licensing can validate the size of the market opportunity in the region.
“From a regulatory perspective, we have reached breakout speed,” said Ola Doudin, CEO and co-founder of BitOasis, a UAE-based digital asset exchange and platform.
She pointed out that there is momentum and competitive momentum among policymakers and regulators to launch frameworks for Virtual Asset Service Providers, or VASPs.
Bahrain and global market Abu Dhabi were the first to do so, with Dubai having just passed its Virtual Assets Act. The Emirates Securities Commodities Authority is next.
Doudin explained that this trend is driven by two factors – the realization that Web 3.0 is upon us, adoption rates are high; and enabling Web 3.0 through balanced regulation will attract investment, create jobs and position countries as centers of innovation.
“We expect to see other GCC and MENA markets follow suit over the next 12 to 24 months,” she added.
The CEO of BitOasis pointed out that 19 of the top 20 crypto markets (by weighted crypto activity) are in emerging or developing economies. “It is therefore not surprising that when a territory announces that it has introduced a regulatory framework – as we are currently seeing in the United Arab Emirates – there is naturally a renewed interest and investment,” said- she declared.
The crypto expert estimates that venture capital investments in the sector through the GCC will exceed $500 million this year alone.
Currently, the digital economy contributes around 4.3% of the UAE’s GDP, which is equivalent to 100 billion dirhams ($27 billion), according to the latest statistics from the Dubai Chamber for the Digital Economy. There are more than 1,400 startups in the country, with 1.5 billion dirhams allocated to them. The emirate has 90 investment funds in the digital sector and 12 business incubators. The total value of startups in the country is estimated at 90 billion dirhams.
In fact, this increased digital activity is not reserved for a niche group of blockchain aficionados; instead, it is spread across different industries. With the basic understanding of crypto growing among the masses, this will benefit most businesses in the long run.