From easy to relatively secure transactions, there’s no denying that blockchain technology is causing a massive transformation in the financial industry. As the crypto market continues to grow, Dubai is leading the MENA region in blockchain technology adoption, competing with Singapore and the UK as a global crypto hub.
Dubai’s Crypto Expansion
Recognizing the positive impacts of future technologies, Dubai has been implementing various initiatives to accelerate the country’s digital transformation. Its first ICT strategy was announced in 1999, followed by the launch of Dubai Internet City, Dubai Government, Dubai Smart Government, and the Smart Dubai Office in 2015. Through the establishment of these, Dubai has become the world’s first government to turn paperless and is widely considered one of the smartest cities in the world.
After realizing the potential of blockchain technology for businesses and city services, Dubai launched a citywide Blockchain strategy in 2016, aiming to be the first city powered by Blockchain technology.
Dubai Crypto Center
To foster blockchain companies in the Emirate, Dubai Multi-Commodities Center (DMCC), the country’s multi-awarded and largest free zone, opened the DMCC Crypto Center to support businesses operating in cryptographic and blockchain sectors. As of April 2022, 257 blockchain and crypto entities were established in Dubai’s crypto hub, with key markets coming from India, the UK, Germany, and France.
Dubai Welcomes Major Crypto Hubs
The initiatives of the Dubai government prove to be working as major crypto hubs are starting to move in the country. Crypto exchange Bybit announced its plans to open its global headquarters in the country, while crypto platform Cryptom.com aims to establish a regional hub in the Emirate.
The largest blockchain technology provider Binance, as well as crypto trading platforms Kraken, and FTX Europe, have all secured licenses to start their operations in the Emirate.
Dubai Accepts Crypto as Payment
In the UAE, the acceptance of crypto as payment has been growing exponentially due to the advantages it gives to investors and consumers. Dubai’s largest consultancy firm, Creative Zone, has started accepting crypto payments from its clients. This is CZ’s initiative to address issues of traditional payment, such as issuance delays of invoices.
Supportive Ecosystem for Blockchain
The country captured global attention when it launched the Future Accelerators program. This initiative aims to reinvent Dubai’s services using blockchain technology. After its launch, companies worldwide have applied to participate and test their products on live city services.
Dubai Regulates Crypto
As the crypto market continues to expand in Dubai, the government is overhauling ways to strengthen the crypto regulation in the country.
The government has established the Virtual Assets Regulatory Authority (VARA) to develop regulations and grant licenses for crypto firms looking to operate in the UAE.
- What Makes VARA’s Role Critical?
Crypto regulations can be a controversial topic for some, but the UAE is firm in developing a safe domestic crypto ecosystem. These regulations will minimize the risks associated with financial technology, including online fraud.
In August, VARA released the following regulations relating to the marketing, advertising, and promotion of virtual assets in the UAE:
Some DOs and DON’TS
– Be fair, clear, not misleading, and early identifiable as marketing or promotional in nature.
– Don’t advocate that investments are safe or low risk or imply guaranteed future return and include a prominent disclaimer that the value of virtual assets is variable and highly volatile.
– Don’t imply that past performance of investments is an effective guide for or guarantee of a future return or imply an urgency to buy;
– Don’t advocate the purchase of virtual assets using a credit or other interest-accruing facilities; and
– Ensure that any targeted marketing is undertaken responsibly by suitably licensed entities.
Who does it apply to?
– All entities that facilitate marketing in virtual assets and cater to resident customers domestic or foreign, whether or not licensed by VARA.
– Any entity that is not authorized by VARA but wishes to conduct any form of marketing must seek authorization from VARA or provide a valid permit by the competent authority outside UAE.
– Marketing by an entity: (i) not conducting virtual assets activity in Dubai; (ii) that originates outside the UAE; and (iii) is not targeting any UAE residents – is not required to comply with Marketing Regulations. However, VARA will have the authority to act if it views that such marketing poses a risk to its reputation or UAE or Dubai’s reputation.
Blockchain Technology is the Future
Dubai’s blockchain-friendly policies show that it is ready to embrace decentralized finance (DeFi) entirely, but why is DeFi slowly becoming more and more popular for business?
Accessibility: With internet access, a computer, or a smartphone, everyone can easily access any DeFi platform without going to any banks.
Low-Interest rates: Compared to traditional lending platforms, DeFi’s interest rates are determined by supply and demand, so the more investors pump money into lending platforms, the lower interest rates will go.
Real-time transactions. Records are instantly updated every time a transaction is completed. In addition, interest rates are updated multiple times every minute.
Asset Retention: Investors can easily retain custody of their assets using non-custodial crypto wallets or via smart contract-based escrow.
Peer-to-Peer transactions: DeFi uses cryptocurrencies and smart contracts to provide financial services, eliminating the need of approvals for third parties such as government agencies or banks.
What to Remember?
Blockchain technology is slowly transforming how business transactions are done nowadays. Although there are numerous benefits that it gives, there might be minor risks that can come along the way. If you are looking forward to adopting DeFi and cryptocurrencies for your business, it’s always good to do a thorough research to prevent any negative impacts in the future.
