UAE is intent on becoming a crypto hub with the launch of new licensing framework
The United Arab Emirates clearly wants crypto. The wealthy Middle Eastern country is preparing to issue federal licences to cryptocurrency service providers in the first quarter of this year.
Citing a government official, Bloomberg broke the news late last week, and it seems the country is keen to attract big, international companies to the region in a bid to become a serious crypto hub.
The UAE government is said to be taking a “hybrid approach” to its impending regulations, with its Securities and Commodities Authority (SCA) taking input from the country’s central bank and considering strategies employed by Singapore, the US and the UK.
The likely outcome will reportedly be regulation from the SCA and central bank, with day-to-day procedural licensing being left to each regional financial centre.
"🇦🇪 UAE plans to issue federal licenses for #crypto service providers!"
What do you think of this big step? 🚀 pic.twitter.com/UM8v8EJJF3
— 5ireChain (@5ireChain) February 18, 2022
In addition to issuing licences to virtual asset service providers (VASPS), the government is also apparently set on creating a favourable environment for crypto mining in the country.
The UAE is the third-largest crypto market in the Middle East behind Turkey and Lebanon and one of the world’s fastest-growing markets, according to an October 2021 Chainalysis report.
In December, the global crypto exchange giant Binance signed an agreement with the authority that runs the Dubai World Trade Centre – one of the city’s many skyscrapers – to establish a global crypto hub.
And in an interview in October last year conducted by US entrepreneur, investor and YouTuber Anthony Pompliano, the Canadian investor Kevin O’Leary, famed for his Shark Tank TV appearances, spoke enthusiastically about the Middle Eastern interest in crypto.
O’Leary said that wealthy Middle Eastern investors could take Bitcoin and the crypto market to “unbelievable” new heights when they decide to allocate a small portion of their funds to the industry.
“The real opportunity is not with the family offices or hedge funds that operate out of the Middle East,” said O’Leary. “The real money is in the actual sovereign funds in both Saudi Arabia and the United Arab Emirates. It’s billions and billions and billions of dollars.
“I speak to those guys almost every day,” he continued. “They would immediately go to one to three per cent on Bitcoin alone… The amount of capital that will come into this market when the regulator approves Bitcoin as an asset or currency or a security, or whatever they’re going to regulate it as, is going to be unbelievable.”
At least one of the UAE sovereign wealth funds O’Leary’s talking about – Mubadala Investment Company – indicated in December that it’s keen to “invest in the crypto ecosystem”.