Why has Dubai become the vibrant capital of the crypto industry?

Dubai, UAE is becoming one of the regions where blockchain companies and encrypted asset service providers choose to settle.

On October 17, the 2021 Future Blockchain Summit, initiated by the Dubai government, is about to open. The summit is a microcosm of Dubai’s embrace of the blockchain and encryption economy in recent years.

As early as 2013, the UAE launched the “Smart Dubai Project”, hoping to improve government efficiency through the use of blockchain technology. In 2020, Dubai released the Blockchain Strategy 2020, emphasizing on building Dubai into the “Blockchain Development Capital of the World”. Not long ago, on September 22, the Dubai Securities and Commodities Authority (SCA) empowered the Dubai World Trade Center Authority to issue approvals and licenses for financial activities related to crypto assets in its jurisdiction.

The embrace of the crypto economy has attracted many crypto asset trading platforms in Dubai. According to public information, Huobi, Hoo, ZB and other exchanges all have offices in Dubai, among which Hufu has simply established a global operation center in Dubai.

The relevant person in charge of Hufu International told Honeycomb Finance that policy-friendly, open and inclusive, and hot money off-site were the main reasons for choosing Dubai. At the same time, relying on Dubai, it is not far to go to Europe, Southeast Asia, India and other countries and regions, and it can also provide services to global compliance countries and regions.

In the Dubai Free Trade Zone, a wave of financial innovation is sweeping, and the blockchain and the encrypted economy are one of the forces.

A number of crypto asset companies settled in Dubai

In three days, the 2021 Future Blockchain Summit (FUTURE BLOCKCHAIN ​​SUMMIT) will open at the Dubai World Trade Center. From October 17th to 20th, the world’s top blockchain technology developers, innovative companies and investors will gather in Dubai to showcase the changes that blockchain brings to the world.

This summit was initiated by the Dubai government in 2018 and has been held for 3 sessions so far. It is the largest blockchain technology and application exhibition in the Middle East and North Africa, and policy attraction is making Dubai a vibrant capital of blockchain and encryption. .

From the official website of the 2021 Future Blockchain Summit, it can be seen that there are many familiar faces in the crypto circle at this summit, including crypto asset trading platforms such as Binance, Hufu International, and Bybit. Dubai, which is relatively open to cryptocurrency, is attracting more and more related companies to settle in.

Why has Dubai become the vibrant capital of the crypto industry?

2021 Future Blockchain Summit official website page

At present, many blockchain and crypto asset companies originating in China have moved to Dubai to seek compliance operations there.

According to media reports, Hufu International is one of the sponsors of this future blockchain summit. The relevant person in charge of the exchange revealed that Hufu International noticed Dubai’s policy advantages earlier and was more culturally tolerant, so the management came to Dubai in the second half of the year for team building, such as office space, personnel recruitment, visas, and residence. Waiting for arrangements, in August this year, Hufu International officially established a global operation center in Dubai.

According to sources, the Huobi Exchange, which plans to complete the clearance of users in mainland China by the end of this year, also has a branch in Dubai. In May, when China’s supervision and strengthening of virtual currency controls, Huobi asked some employees to go there. Dubai office requirements. In addition, the exchange named CoinW also publicly stated that it will establish a global operations center in Dubai.

Why are these crypto companies looking at Dubai? Why has this UAE city, which was once famous for its rich oil resources in the world, turned into a fertile ground for the growth of the blockchain and encryption industry?

Judging from the economic development trend of the UAE, this “rich and oily” country has been seeking new economic growth points in recent years. Among them, the tourism industry has developed to a huge scale, and this oil country has also been trying to develop blockchain , Big data, artificial intelligence and other technologies to carry out digital transformation.

As early as 2013, the UAE launched the “Smart Dubai Project”, hoping to improve government efficiency through the use of blockchain technology, and promote blockchain from 1.0 (payment tools) to 2.0 (financial industry applications), and then to stage 3.0 (other industries) And government management applications).

In 2016, Dubai established the Global Blockchain Committee, which currently has more than 30 members, including government entities, international companies, and blockchain startups. In April 2018, Dubai Prime Minister Sheikh Mohammed announced that the Dubai government will achieve half of its government business using blockchain technology by 2021, and three months later, the Dubai International Financial Center Court Binance announced a partnership with the “Smart Dubai Plan” Establish cooperation and set up a “blockchain court”.

In 2020, Dubai released the Blockchain Strategy 2020, again emphasizing the building of Dubai into the “Blockchain Development Capital of the World”. So far, the Dubai government and private institutions are exploring blockchain application examples in various fields such as finance, education, real estate, and tourism.

Thanks to the heavy investment in the blockchain field, the Global Financial Center Index (GFCI) released in July this year ranked Dubai as the eighth most important financial center in the world, which is the highest ranking ever in Dubai. Almost at the same time, the UAE Central Bank announced that it would issue its own digital currency, Govcoins, to create an innovative financial infrastructure.

From these development footprints, it can be seen that Dubai seems to have the heart of “All In” blockchain. Its ninth chief, Sheikh Mohammed, once famously said, “No one will remember who the second is. If you want to be the number one,” Dubai has built the world’s tallest building, the Burj Khalifa. When the digital age came, Dubai showed its ambition to become the world’s blockchain center.

Open supervision of trading activities to accelerate the prosperity of the crypto ecosystem

Regarding the crypto asset exchanges at the top of the “pyramid” of the blockchain and crypto asset industry, can Dubai accept them? What are the relevant policies?

The relevant person in charge of Hufu International introduced to Honeycomb Finance that Dubai currently implements open supervision of encrypted asset exchanges.

In accordance with the policy issued by the Dubai Securities and Commodities Authority (SCA) on November 1, 2020, the “Chairman of the Authority’s 2020 Decision (23/RM) on the Supervision of Crypto Asset Activities”, provide crypto assets in Dubai (Or any related services) There are two requirements. First, the provider must be incorporated in the UAE or any financial free zone in the UAE; second, the provider must be licensed by the Dubai Securities and Commodities Authority SCA. At the same time, applicants must prove that they will strictly abide by the UAE’s anti-money laundering and anti-terrorist financing laws, cyber security compliance standards and data protection regulations. 

This means that to carry out crypto asset trading business in Dubai, you need to register in the UAE and apply to the regulatory authorities to obtain a license. Compared with the prohibition of crypto asset trading activities in some countries, Dubai’s relevant regulatory policies give the trading platform the operability to apply for becoming a compliant operation platform.

It is worth noting that the relevant access policies for the development of crypto asset exchanges in Dubai have been liberalized in the near future. On September 22 this year, SCA and the Dubai World Trade Center Authority (DWTCA) signed an agreement to support crypto asset transactions and related financial activities in the Dubai Free Trade Zone.

According to Hufu International Observation, the agreement allows DWTCA to issue approvals and licenses for financial activities related to crypto assets in the Dubai World Trade Free Zone. SCA supervises entities engaged in cryptographic services in the free zone, such as issuing, listing, trading and Licensing process. This means that SCA has given DWTCA more direct powers to accelerate the rise of crypto asset trading activities within its jurisdiction.

After the signing of the relevant agreement, Helal Saeed Almarri, Director General of DWTCA, publicly stated that Dubai will expand its support for blockchain and encryption technology-based investments and startups in the free zone.

“This is also an important reason for Hoo to choose Dubai.” The above-mentioned head of Hufu International said that in a favorable policy environment, Hoo has reached a cooperation with the Dubai government and will use the entire office building provided by the Dubai government as its global operating headquarters. The Middle East region is a base for global business.

According to the source, Hufu International is currently applying for a UAE cryptocurrency business license. At the same time, Hufu Group was also invited to jointly establish the Dubai Blockchain Research Institute with the Dubai government and others to promote the application of blockchain technology.

DeFi development is still lacking, geographical location still has advantages

Compared with most countries and regions who are cautious about developing the crypto economy, the UAE and Dubai appear vibrant. Affected by this, UAE residents’ interest in investing in crypto assets has also increased.

According to a study by financial services company Holborn Assets, 44% of the more than 1,000 respondents who participated in the survey said they were satisfied with investing in cryptocurrency in 2021, and nearly one-fifth of them were UAE residents. Among the nationalities surveyed, UAEs are the most enthusiastic group of investing in cryptocurrency, accounting for 33%, surpassing Arab diaspora (23%), Asian residents (24%) and Westerners (19%).

Stefan Terry, head of Holborn Assets’ UAE office, said UAE residents’ demand for this new and attractive asset class is clearly growing, especially considering the returns it may bring to investors.

For the crypto asset industry, the current state of evolution is DeFi. Although UAE residents have shown interest in crypto asset investment, the development of DeFi in the local area is still lagging. The relevant person in charge of Hufu International found that DeFi is still in the stage of exploratory research in the UAE, and the current regulatory authorities do not have clear supervision on innovative blockchain-based applications such as DeFi and NFT.

The person in charge observed that although the UAE has paid special attention to the development of blockchain in recent years, its talents and various infrastructures in the upstream and downstream industries are not perfect. Therefore, there is still huge room for blockchain development in the local area. However, after the Dubai government has introduced preferential policies for blockchain companies such as a loose foreign exchange system, tax exemption policies, and financial support, the local blockchain and encryption industry is expected to advance by leaps and bounds.

In fact, in most people’s minds, Dubai has not been a science and technology center since ancient times. Compared with popular markets such as Southeast Asia, Europe and the United States, the development of science and technology in the Middle East is relatively backward and the culture is conservative. However, the local government attaches great importance to the rise of blockchain, and has also used attractive policies to add a technological color to Dubai.

The above-mentioned person in charge of Hufu International revealed that Hoo chose Dubai to establish a global operation center. In addition to its policy-friendly policy, its geographical location also has considerable advantages. “In Dubai, there are people from all over the world. Relying on its geography and culture, Dubai can attract the attention of users in the Arabian Peninsula and Arab countries. This market is still quite large.” In addition, Dubai is located in the middle of the Middle East, far from Europe, Southeast Asia, Countries and regions such as India are not far away, and they can also provide services to global compliance countries and regions.

After setting up a camp in Dubai for several months, Hoo has formulated a basic development strategy. The person in charge said that Dubai is more like a transit station and gas station for Hoo. “We can put the core team of development and products in Dubai. When expanding markets in other regions such as Europe, America, Southeast Asia, etc., we will also build market and operation teams based on local conditions.”

Hoo’s strategic decision also provides an idea for practitioners in the crypto asset industry. As countries in the world currently implement different regulatory policies on the encryption industry, relevant companies need to seek a stable and friendly country to take root in the development of the encryption industry, and Dubai has become one of the current choices. On this basis, encryption companies seek to develop compliance in more regions in accordance with the regulatory trends of various countries before they can become a more long-term strategic plan.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/why-has-dubai-become-the-vibrant-capital-of-the-crypto-industry/
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