Grow your Crypto Business in Dubai

The UAE realised the potential of Blockchain and cryptocurrencies early on, and is developing a robust and welcoming regulatory structure for businesses and entrepreneurs

The rise of cryptocurrencies has been a steady feature over the past few years, with the Blockchain-based medium of exchange growing in popularity and use. For businesses, the potential benefits of cryptocurrencies are huge, not least by increasing the speed of transactions and lowering the ‘cost of trust’.

We have also seen growing applications beyond solely cryptocurrencies. GameFi, also known as ‘play to earn’ (P2E), allows gamers to earn cryptocurrency while they play online games and grew 2,934% between March and December last year. Decentralised Finance (DeFi) has seen financial innovations such as non-dollar stablecoins offer exposure to a range if international fiat currencies and non-fungible tokens have grown in popularity given their potential to assign ownership to digital art and other assets.

The United Arab Emirates (UAE) has understood the promise that this technology can bring and has moved to set up a regulatory framework aimed at attracting talent and companies in the Blockchain and crypto space. The Emirates as a whole are seeking to reduce their reliance on the oil sector and looking to develop knowledge-based industries of the future as articulated in the ‘Abu Dhabi Economic Vision 2030’. As such, we have seen considerable movements in support of crypto over the past few years.

Regulating quickly and smartly

The regulatory authorities for the UAE have consistently been ahead of the curve when it comes to managing and regulating Blockchain-based technologies.

As far back as 2018 the UAE saw the promise that Blockchain technology could bring and set up the world’s first comprehensive regulatory framework for virtual assets. Abu Dhabi Global Market’s (ADGM) Financial Services Regulatory Authority (FSRA) established a framework that regulated the virtual asset activities of multilateral trading facilities, brokers, custodians, asset managers and other intermediaries.

Furthermore, with the recent rise in crypto adoption the UAE’s Securities and Commodities Authority (SCA) moved quickly to set up a framework that allows crypto businesses to operate in the Dubai Multi Commodities Centre (DMCC). In March 2021 the DMCC and the SCA signed an MoU that established a regulatory framework for businesses offering, issuing, listing, and trading crypto assets in DMCC.

This agreement allows crypto businesses to secure licenses and operate under a legal framework that is hoped will foster growth and promote Blockchain development in Dubai.

In October last year the Dubai Financial Services Authority (DFSA) published a framework that regulates Investment Tokens – either a Security Token or a Derivative Token. The framework governs those who wish to market, issue, trade or hold Investment Tokens in or from the Dubai International Financial Centre (DIFC). The DFSA is also exploring a regulatory framework for Investment Tokens, including cryptocurrencies, utility tokens and stablecoins.

Opportunities for entrepreneurs

Overly burdensome regulations can kill entrepreneurship, but smart regulations can create an environment where innovation can flourish. For crypto entrepreneurs, the UAE offers significant opportunities in a safe, stable and welcoming business setting.

The three main free zones in Dubai, the DMCC, Dubai Airport Freezone (DAFZA) and the Dubai World Trade Centre (DWTC) each have agreements with the SCA that allow for the establishing of crypto and Blockchain firms.

The DMCC is regarded as the main player and pioneer in this area, offering licenses for proprietary trading and blockchain and a number of initiatives including a Crypto advisory practice, incubators, events, and networking etc.

They also launched a DMCC Crypto Centre designed to create an ecosystem of crypto and blockchain entrepreneurs, investors and partners. The centre includes a co-working space for entrepreneurs and SMEs as well as access to an accelerator program and incubator. By creating a place where entrepreneurs, corporates, investors and regulators can come together it is hoped that the DMCC Crypto Centre will drive the creation of a sustainable Blockchain and crypto sector in Dubai.

DAFZA signed an MoU with the SCA in May 2021. The SCA will oversee the offering, issuance, listing and trading of crypto assets within DAFZA, as well as handling all necessary licensing and approvals for crypto companies with regards to trading.

Companies dealing in cryptoassets and cryptocurrencies will be able to operate within DAFZA’s jurisdiction and the agreement is expected to drive growth and investment in DAFZA from crypto firms.

DWTC also signed an agreement in December last year and while no projects have been announced as of yet, it is expected to create a zone within the free zone for virtual assets. DWTC already offers a well-run and well-regulated environment for businesses seeking local and international opportunities, with more clarity for crypto firms it is expected to increase the size and scope of its offerings and support.

While the SCA has been proactive and supportive to the Blockchain sector, traditional financial services are beginning to turn their attention to the technology. The Swiss digital asset-focused bank, SEBA Bank, is reported to be eying expansion in the UAE following its recent $120 million funding round. We can expect more innovation in this area in the future as well as more options for entrepreneurs and start-ups.

Build the future of crypto in Dubai

Whether or not you are working in Blockchain and crypto, Dubai is a welcoming place to come and set up a business. Strategically located between Europe and Asia and next to the Middle East and Africa, Dubai is home to thousands of entrepreneurs from all over the world who benefit from its stable legal system, safety as well as a multitude of leisure and travel options.

For any budding crypto entrepreneur with a great idea and business plan, who wants to benefit from the tax-free status that residency brings, as well as access to major international and regional markets, Dubai should be the first place to set up.

For information on setting up a crypto company in Dubai, contact Alpadis Group.