The United Arab Emirates and Cryptocurrency

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    The United Arab Emirates and Cryptocurrency

    The UAE has enjoyed being a desirable business location for years. It is all set to become the world’s biggest cryptocurrency hub.

    The UAE government is whole-heartedly bringing favorable crypto-specific regulations. Even the citizens are reciprocating with not only active interest and investments in crypto, but getting their own crypto getting developed.

    Let’s check out the latest developments in UAE’s crypto scene.

    Trend #1: Decentralized Finance in UAE

    Decentralized Finance promotes peer-to-peer lending/borrowing using blockchain technology. It eliminates the mediators (like banks and brokers) in rendering banking and financial services pertaining to cryptocurrency.

    UAE’s Securities and Commodities Authority issued regulations on crypto assets. As a result, the foundation stones for several decentralized finance (Defi) projects were laid in the UAE in recent years. Because the regulated environment automatically ensures the sustainability of Defi protocols.

    Besides, the Dubai Multi Commodities Centre (DMCC) already has a crypto center working to attract key business players for Defi engagements.

    Trend #2: The UAE youth and cryptocurrency

    The younger demographics in the UAE have a great attraction towards cryptocurrency. Here’s what we know:

    • In multiple surveys conducted so far, a significant percentage of 18-25-year-olds reported that they might extensively invest in crypto.
    • Many of these youngsters who show interest in cryptocurrency are gamers.
    • A considerable percentage of the professional gamers in the UAE already hold several digital assets.
    • A study conducted by YouGov concluded that two out of three young adults in the UAE wish to invest in cryptocurrency today.

    Trend #3: A push for national digital currency

    The gulf economy, in general, is experiencing radical changes already. One of them is the possible replacement of traditional financial systems with digital alternatives like cryptocurrency, at least in the UAE.

    The Central Bank of UAE has a unique 2023-2026 policy that outlines several radical economic changes. The central bank claims that it will launch a national digital currency by 2026.

    The launch of a digital currency, combined with seamless administrative regulations, will eventually position the UAE among the wealthiest economies. It will also allow the Central Bank of UAE to enter the list of the world’s top 10 central banks.

    The acceptance of cryptocurrency for exchange has begun in the government sector already. For instance, the Kiklabb License bureau in Dubai accepts cryptocurrency for licensing, workspace grants, business visa payments, etc.

    Trend #4: Crypto-specific laws

    The authorities are giving a legal mandate to their people for cryptocurrency trading. For this, they are introducing crypto-specific laws and regulations.

    Take a look.

    The constitution of the Dubai Virtual Assets Regulation Authority safeguards the interests of all crypto investors within the country. It aims at promoting security and transparency in all crypto-related transactions.

    Sheikh Mohammed bin Rashid Al Maktoum, the Vice President, Prime Minister, and Minister of Defense of the United Arab Emirates made this announcement.

    It indicates how seriously the administration is tracking the sale of virtual assets and virtual tokens.

    Trend #5: NFTs on the rise

    Other cryptographic assets based on blockchain technology, like Non Fungible Tokens (NFTs), are also becoming popular in the UAE. In multiple independent surveys, participants reported that they own at least one NFT already.

    According to estimates, the number of people currently owning NFTs in the UAE is double the global average.

    With the likes of Dubai Police also embracing NFTs for its digital token collection, it is quite evident that the UAE will not miss out on milking the opportunities emerging from NFT exchanges.

    Therefore, it will be interesting to see how the government shapes its policies to encourage such investments. After the legalization of NFTs, the generation of newer use cases and avenues for NFT payments remains a big task for the State.

    Trend #6: Cryptocurrency for Day-to-day Use in The UAE

    Just to widen payment processing offerings, several sectors in the UAE are moving towards accepting cryptocurrency payments.

    For instance, in the hospitality sector, resorts are using LucidPay. They have developed a unique blockchain-based payment gateway where they accept different modes of payment, including cryptocurrency.

    Besides this, there are many private hospitals and healthcare institutions beginning to accept cryptocurrency. The deployment of crypto currency payment methods did not see much success for the restaurant chains in the UAE.

    However, for other engagements involving bigger transactions, like auctions, the use of cryptocurrency is becoming popular everyday.

    Trend #7: Rise In Competition

    Global crypto giants see Dubai as a goldmine. With government incentives and rising public acceptance, the UAE is a fertile ground for them to flourish.

    The U.S. cryptocurrency exchange Kraken is opening an office in Abu Dhabi as a licensed trading platform. Earlier, Binance went on a hiring spree to increase activity in the UAE.

    BitOasis was bought under the purview of UAEs new digital currency regulations while, Coinmama, eToro, etc., are also sweating it out to capture this growing crypto market.

    The final argument

    The UAE, in some ways, has the first-mover advantage by accepting new technology with open arms when other countries are still skeptical about it.

    The government’s acceptance, willingness, and vision for cryptocurrency in the UAE is encouraging. Plans to make Dubai a global hub for cryptocurrency and other virtual assets is on the cards already. It is generating excellent results for the country. Now, it will be interesting to note how far the UAE economy can go with its liberal approach toward cryptocurrency

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