The UAE, and Dubai in particular, is a hotbed of premier technology companies looking to create brilliant products and services by leveraging the ongoing interest in cryptocurrencies and blockchain technology. Backed by a forward-thinking, tech-driven government, there’s no question that the UAE offers organisations a place to build their businesses in a community of modern enterprise.
Where other regions are struggling to keep pace with the rapid evolution of the crypto space, the UAE is at the forefront of positive change, creating a culture that supports businesses wanting to leverage blockchain and decentralised finance technology. If you want to create a tech startup then the UAE, right now, is probably the best place and time to get it done.
Sheikh Mohammed bin Rashid said it best: ‘The future belongs to those who design it. Through the virtual asset law, we aspire to participate in shaping the future of this ever-evolving sector.’
UAE making big strides
The Dubai Virtual Asset Regulatory Authority (VARA) will be in charge of overseeing the regulation, licensing, and governance of virtual assets, non-fungible tokens (NFTs), and cryptocurrencies in the UAE. According to Sheikh Mohammed bin Rashid, the law is intended to promote the development of the digital industry while also protecting the rights of investors. Special development zones and free zones throughout the emirate will be developed.
H.E. Helal Saeed Al Marri, Director-General of the Dubai World Trade Centre Authority, stated that the new law and the establishment of VARA will strengthen the UAE’s position in the virtual asset industry and attract technology leaders from across the world.
The establishment of VARA is a big part of legitimising and regulating the crypto industry, and the authority will function as the central custodian for businesses such as crypto exchanges – bringing together the world’s virtual asset (VA) market leaders as well as helping to establish innovative new startups.
Exchanges are key
While these developments are serious steps in the right direction, many people are still getting to grips with all things crypto. So let’s take a step back for a moment, and consider the digital infrastructure needed to kickstart a blockchain business.
A cryptocurrency exchange is a website where you buy and sell digital currencies. You can use exchanges to trade one cryptocurrency for another, such as Ether to Cardano, or to buy cryptocurrency with fiat (or regular) currencies – such as the dirham.
Exchanges show current market prices for the cryptocurrencies they list and can also use them to convert cryptocurrencies back into fiat currencies. Typical exchanges allow you to use their own wallet or your own depending on the technology you favour most. Like any exchange, money is made on transactional fees and so scale plays a big part in how much each exchange can make.
The reason that exchanges are so important in the success of the UAE’s growing crypto sector is that they attract further investment . Some of that investment is then used to develop services further and it quickly becomes a powerful cycle within the industry where the very fact that crypto gathers a lot of media interest in turn brings it more money and opportunities to develop. With all that cash floating around, new businesses are popping up in the UAE ready to take advantage of the government backing and the rapid growth of the larger crypto market.
It’s all well and good for us to say that there’s big growth and some amazing tech players setting up in the UAE, but let’s actually show you how big this is with some examples of exchanges now heavily involved in the UAE.
Binance has been pushing into the Middle East market and it’s the second city Binance has secured approval from with the company receiving a crypto licence in Dubai earlier in the year. Binance is by far the biggest crypto exchange out there with an annual exchange volume of $7.7 trillion in 2021. The fact that Binance is expanding not only to the Middle East but particularly into Dubai goes to show how much faith they have in the support of VARA and the wider UAE government.
Yoshi Markets has recently received Financial Services Permission (FSP) from the Financial Services Regulatory Authority (FSRA) in Abu Dhabi. The team at Yoshi Markets is based in Abu Dhabi and includes a host of experts from across the UAE and Europe. Their belief as a business is that rapid growth within the crypto world will continue, particularly locally in the UAE, and their next step is to work directly with banks to create on-ramp and off-ramp options for their customers.
BitOasis is one of the Middle East’s biggest cryptocurrency trading platforms. It has so far carried out cryptocurrency trades in excess of $4 billion since it was founded in 2015. BitOasis received its ADGM financial services permission in 2021 and the company raised $30 million in series B funding last year with plans to expand further across the region. That funding alone should show you how much faith investors have in crypto startups in the UAE.
Kraken, a US crypto exchange, is expanding into the Middle East and will open its regional headquarters in Abu Dhabi. Kraken will become the first cryptocurrency exchange to offer direct funding and trading in UAE dirhams – which is a step that shouldn’t be underestimated. The UAE transacts approximately $25 billion worth of cryptocurrency each year and Kraken sees that being on the ground in the unofficial crypto capital is the best next step for their operation.
The perfect environment for crypto startups
In case you didn’t know, a free zone is an area that is designated as a space where businesses can trade with preferential tax rates and cuts on customs charges.
Opening a business in a free zone is actually very straightforward . There isn’t a great deal of paperwork required to carry out the process, and becoming a legal entity takes almost no time at all. Once you figure out your structure and what type of company to register as you just need to put together all your documents.
What’s truly great about this evolving culture of digital tech is that it helps link businesses with each other so they can deliver their services to markets outside of just crypto. For instance, Dubai’s grocery delivery service, YallaMarket, now accepts cryptocurrency as a form of payment. What’s perhaps even more interesting is that the firm is now looking into ways to pay its staff in digital assets.
Crypto really is taking over. And while other governments scramble to create regulatory bodies and establish their position on crypto, the UAE and Dubai have already taken the lead as a hub of innovation. Companies based here are well-positioned to thrive.
While current market conditions (at the time of writing) may appear less than savoury, given the crypto market’s high volatility, only the boldest advocates are looking to get some proverbial ‘skin in the game’. However, it stands to reason that those with a long term focus – rather than designs on short term gain – are likely to truly prosper.
HODL on tight, is all we’ll say..