Dubai positions itself as a crypto zone

Dubai positions itself as a crypto zone

Dubai positions itself as a crypto zone

From “Bitcoin-phobia” to “Bitcoin-philia”, national governments, central banks, regulators and financial firms are now rethinking their positions on once-derided cryptocurrencies such as Bitcoin.

In their brief existence, cryptocurrencies have grown from digital novelties into a $2 trillion market. Cryptocurrencies are now increasingly held as investments and have minted a new cadre of millionaires and billionaires over the past 12 years.

From banning or limiting cryptocurrency use, some governments such as Dubai have turned towards embracing cryptocurrencies and even strategizing to take advantage of the anticipated crypto boom.

Crypto Hub of The Middle East

Dubai, one of the United Arab Emirates federations of seven emirates, has joined the list of governments that are scrambling to respond to the emerging power of cryptocurrencies to transform international commerce.

The Dubai World Trade Centre (DWTC) recently announced an initiative to position itself as a crypto zone and regulator for virtual assets. According to a report in Reuters attributed to the Dubai Media Office, this was part of efforts to attract new business as regional economic competition heats up.

The specialized crypto zone will accommodate “virtual assets – including digital assets, products, operators and exchanges.” The statement added that the zone would develop:

“Rigorous standards for investor protection, anti-money laundering […] combating the financing of terrorism, compliance and cross-border deal flow tracing.”

The move follows the signing of an agreement between the UAE Securities and Commodities Authority and the Dubai World Trade Centre Authority (DWTCA) last September to allow the DWTCA to approve and license financial activities relating to crypto assets.

His Excellency Helal Saeed Almarri, the Director-General of DWTCA, stated:

“With the rise of new technologies such as non-fungible tokens set to play an important role in the future of commerce […]DWTCA is also pursuing ways to offer a sustainable home for this ecosystem, in order to stay future-ready.”

In October, the Dubai International Financial Centre (DIFC), Dubai’s state-owned financial free zone and the Middle East’s major finance center, released the first part of a regulatory framework for digital tokens.

Binance, the world’s leading cryptocurrency exchange, became the first firm to join the new crypto hub.

A Steady March into the Mainstream

The value of cryptocurrencies like Bitcoin that was once dismissed as assets of fringe interest by tech-evangelists, has skyrocketed in recent years, with the price of Bitcoin reaching an all-time high of over $68,000 in November 2021.

Bitcoin gained momentum in September 2021 when El Salvador declared Bitcoin to be legal tender alongside the U.S. dollar. Soon after that, there was talk of making BTC a medium of exchange in Afghanistan to enable financial transactions since the issuance of fiat currency had broken down.

The recent introduction of a Bitcoin Exchange Traded Fund also bolstered Bitcoin’s stealth march into mainstream finance such as the New York Stock Exchange, by allowing U.S.-based investors to speculate on Bitcoin prices without owning it.

While they continue to elicit a mixture of fear and enthusiasm, it’s becoming evident that cryptocurrencies may have a bright future that could transform how we conduct payments, banking and other financial transactions.

This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.

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