Earlier this week, ministers from the world's top economies, the G7, called for greater speed as financial watchdogs introduce comprehensive crypto regulation. This comes shortly after Terra's demise saw several crypto users suffer considerable losses in the space of a week. G7 Contacts FSB to Hurry Things Up The stablecoin failed to maintain its dollar peg and crashed as low as $0.07, with sister token LUNA not far behind. This created a ripple effect as general market anxiety destabilized even…
Cryptocurrencies have become a global phenomenon in a matter of a decade. The world experiences a quickly-growing interest and awareness of digital assets. Primarily, it is among the younger generations, who have a deeper knowledge and understanding of technology. Therefore, the UAE has positioned itself as a nation eager to accept the latest technological advancements.
We have seen significant changes in the crypto treatment in Dubai and the rest of the UAE. The article will focus on these developments in detail. Let’s dive in!
The Market Share of Cryptocurrencies
The digital economy contributes approximately Dh100 billion ($27.25 billion) to the UAE’s GDP. The amount accounts for 4.3 percent of its total output.
In the country, over 1,400 start-ups have a total estimated value of Dh90 billion. In addition, more than 90 investment funds are dealing with crypto. Other companies are also starting up to provide crypto-related services.
A new survey shows that 50% of institutional investors in the UAE plan to enhance their direct exposure to cryptocurrency. An additional 50 said they are thinking of including them in their portfolio. The estimated timeline for both was between now and 2023.
Despite the volatility in the crypto market, the study verifies there’s an increasing hunger for crypto in UAE.
Banks and Cryptocurrencies
There are two identical crypto worlds in the UAE. One is not official, runs separately, and doesn’t come under any regulative structure. The financial institutions are not responsive since the crash risk is too high. On the other hand, several well-regulated entities provide their customers’ openness. They also run under an identified regulatory authority.
Nevertheless, cryptocurrency is still a reasonably new idea. It will be a long time before banks get used to the concept. Jurisdictions like ADGM and DIFC came up with crypto policies. Last year the central financial institution of the UAE came up with a digital assets plan. After that, worldwide organizations stepped in. It is a matter of time before blockchain innovation use cases go mainstream.
In a bid to top in blockchain innovation, the UAE has introduced the UAE Blockchain Strategy 2021. Its goal is to ensure that 50% of government deals happen via blockchain technology. They scheduled the transition completion by the end of the year. In addition, the government provided policies on using crypto assets to solidify its vision.
Dubai Future Foundation has developed a Global Blockchain Council. Its goal is to check out, review present and future applications, and arrange blockchain transactions.
The Council will also look into both financial and non-financial commerce spaces. In addition, it will enhance effectiveness and dependability degrees. The Council consists of 46 participants. Some of them are federal government entities and worldwide blockchain innovation companies.
Many investors have stated that there is a lagging worldwide regulatory clearness. In turn, it is becoming an obstacle to crypto growth. In addition, various other difficulties consist of issues regarding the safety of digital assets. Also, the market occupation size and liquidity have raised concerns before.
Dubai Blockchain Strategy
The Government of Dubai has sought to advertise blockchain innovation through the “Dubai Blockchain Strategy.” Once Dubai completes the project, it becomes the first “blockchain-powered government.”
Following this, the Dubai Land Department (DLD) established a blockchain system. It was aimed at documenting all realty agreements and weblink DLD with energy businesses. The blockchain system will likewise permit renters to create resettlements digitally. In addition, it will lead to such deals being paperless and, for that reason, affordable.
The DLD wants to push all limits. It is working to enable deal completion without parties showing up before any government body. Remarkably, specific property developers in the UAE have revealed that they currently permit purchasers to invest in their projects utilizing One-Gram, the Shariah-compliant cryptocurrency.
Update on KSA
With the current deal between the Saudi Arabian Monetary Authority (SAMA), the Main Financial institution of Saudi Arabia (KSA), and Ripple, financial institutions in KSA can use Ripple’s xCurrent blockchain innovation.
It enhances immediate cross-border resettlements, production. It ensures that KSA also remains in the race to end up being a center in progressed innovation. Nevertheless, we should keep in mind that the SAMA is still in the middle of establishing policies. For that reason, no regulative structure exists in connection with this digital space in KSA.
Maintaining its vision, the FSRA is the initial and only regulatory Authority to release policies associating with running a crypto company. Besides, as the government has recently adopted ADGM policies, it continues to look into their execution.
Likewise, talks between the UAE and KSA are taking place. They are working to produce a cryptocurrency for cross-border deals. Both countries look top in this area of technical advancements.
DWTCA to Approve Licences
Last week, the United Arab Emirates’ Securities and Commodities Authority signed an agreement with the Dubai World Trade Centre Authority (DWTCA). It aimed at supporting the trading of crypto assets in DWTCA’s free zone, state news agency (WAM).
The contract will permit the DWTCA to provide approvals and licenses for crypto asset-related financial tasks.
The SCA will be accountable for the regulative guidance of providing, providing, trading, and noting crypto assets. It will also license financial activities associated with them within the limitations of the DWTCA free area.
The SCA will assist and examine the certified entities within the free area. It will likewise perform any examinations needed.
These recent developments are a sign that there is a growing interest among officials to understand how this technology works. It also spells out what it means for them and also to see how they benefit from it.
However, before crypto takes hold in the UAE, authorities must educate individuals on protecting their digital assets. According to figures from the Dubai Police, Dubai residents’ losses have gone up to nearly $22 million in cryptocurrency scams this year.
The younger generations will be the first to learn how to trust cryptocurrencies and use them more securely. Of course, that exact change will happen with migrant workers, but it will not happen as fast because they are more careful with money. Hence, it might happen in the next five to 10 years. All in all, we expect to see more crypto advancements in the UAE soon.