The UAE’s decision to capitalize on sustainable technology solutions is paying dividends. Dubai is quickly becoming a hotbed for blockchain and crypto innovation. The region is garnering global attention by setting up frameworks that aid in blockchain and cryptocurrency development by introducing laws and license regulations.
CCAF Report: Fintech Scenario in MENA
The Cambridge Centre for Alternative Finance(CCAD) published a report putting light on the measures taken to leverage business opportunities and reduce risk factors brought forward by the expanding fintech industry in the MENA region. Entitled “Fintech Regulation in the Middle East and North Africa”, the report consists of data from multiple nations, including free zones such as ADGM(Abu Dhabi Global Market) and DIFC(Dubai International Finance Centre).
The report indicates most of the surveyed regulators in financial matters acknowledge the growing prevalence of fintech in increasing market development(85%), promoting financial inclusion(77%), encouraging free trade and competition(69%), and expediting the incorporation of digital financial services(62%). Multiple regulations were introduced prioritizing remote onboarding, especially after the pandemic.
Dubai Legislations boost Blockchain and Crypto Development
Early Smart City Plans
The UAE had its sights set on becoming a global crypto hotspot for a while. The Dubai Land Department had migrated to a blockchain-based system for securing financial transactions and storing digital records of each real estate contract, facilitating contact between domestic utility billers(electricity, water, telecommunications, and more) with homeowners and tenants, launching it as early as October 2017. The Smart City blockchain strategy is capable of making annual savings worth USD 1.5 billion or 25.1 million man-hours and attracting fintech investors as well. Government-related services including visa applications ad license renewal make use of blockchain technology.
Raj Chowdhury, a blockchain pioneer and the CEO of US-based blockchain development company HashCash Consultants, acclaimed the government’s stance in the Emirates, stating, “UAE is attracting global attention as a hub for blockchain innovation. HashCash looks forward to participating and making a contribution towards progress with its expertise in blockchain, crypto, and fintech development.” HashCash has made a notable contribution to UAE’s crypto transformation offering its blockchain-powered crypto exchange technology to accelerate crypto operations.
Legal Implementations and Licenses
The quest to create the best environment facilitating blockchain and crypto trade and development led UAE in creating and adopting a legal regulatory framework. The latest upcoming mandate will require crypto service providers to obtain authorized licenses in a move to bring forward crypto regulation. The Security and Commodities Authority(SCA) resolution was built after a crypto risk assessment comprising 12 public and 16 private finance agencies. Experts opine that having a regulatory framework will improve growing cybersecurity concerns and focus on the protection of consumer wealth assets.
The SCA regulatory body was set up as early as 2018. Several free zones with decreased taxation were introduced all across Dubai, Abu Dhabi, and other parts of the UAE including a zone dedicated solely to digital assets, the Crypto Oasis. The DMCC(Dubai Multi Commodities Centre) free zone also issues unique crypto licenses for blockchain and crypto organizations.
Virtual Asset Regulatory Authority
The proposed crypto licensing and authorization will be conducted by Dubai’s Virtual Asset Regulatory Authority(VARA). All regions excluding DIFC will fall under VARA jurisdiction, including crypto business enterprises within Dubai mainland and Free Zone territories. The establishment of the regulatory body is built upon the strategies prescribed by Dubai SEHC.
Helal Saeed Al Marri, the Director-General of DWTCA mentioned that in addition to the licensing, the Dubai VARA will also offer multiple digital asset services in partnership with UAE Central bank and SCA. The governing organization will also perform as the central custodial authority of Dubai’s rapidly growing crypto authority.
Blockchain And Crypto Industry Impact
“One of the biggest market disruptors in modern-day innovations, blockchain technology will soon become omnipresent owing to its wide scope of applications. Market forecasts indicate similarly, and the rising demand for blockchain solutions will soon transform into a necessity,” mentioned Chowdhury.
Blockchain technology has brought forward countless innovations disrupting the current markets. Highly anticipated upcoming innovations such as the metaverse and Web 3.0 are powered by blockchain, which has greatly optimized processes across the BFSI sector, supply chain, technology solutions, payment remittances, and more. Companies like HashCash have also offered their blockchain expertise in space research and digital media consortium, and brand loyalty programs.
Rapid blockchain and crypto adoption around the world has increased their relevance across multiple industrial sectors. Dubai is capitalizing on this market disruption by setting up the necessary infrastructure, and legal framework, and implementing blockchain technology for becoming a global hub for cryptocurrencies.