With practically 3 million customers— round a third of its population — the United Arab Emirates has the world’s highest cryptocurrency adoption fee, by some estimates.
But the Gulf nation doesn’t simply need to purchase digital currencies — it desires to turn out to be a crypto capital.
In addition to rolling out one in all the world’s most complete crypto regulatory frameworks and the launch of a dirham-backed stablecoin this 12 months, the UAE final week approved the first global license for Binance, the world’s largest cryptocurrency alternate, inside Abu Dhabi Global Market (ADGM), a particular financial zone in the Gulf nation’s capital.
“Our global users now have the assurance that we’re subject to the regulatory oversight of ADGM,” Binance CEO Richard Teng advised NCS.
The metropolis’s push on cryptocurrency in recent times has made it “compelling” for corporations like Binance, mentioned Teng, who’s a former CEO of ADGM’s Financial Services Regulatory Authority. “It has a very pro-business environment,” he added. “The regulators here started to regulate crypto about seven years ago … (it has) the fastest-growing capital markets and fastest-growing financial center in the world. So, it’s a very enabling environment for us to help ourselves here.”
The UAE’s sovereign wealth funds, estimated to manage belongings price $2 trillion, are investing closely in decentralized digital finance fashions in a bid to diversify their economies away from fossil fuels, cut back their reliance on the US greenback, and streamline banking and cross-border transactions.
“We have a very thriving crypto and blockchain ecosystem growing up in Dubai and Abu Dhabi,” mentioned Ronit Ghose, head of way forward for finance at analysis group Citi Global Insights.
While the UAE is main the cost, different international locations in the Gulf Cooperation Council (GCC) are additionally exploring digital finance, with Saudi Arabia focusing on blockchain and Bahrain one in all the “frontier states” in its adoption of crypto guidelines, Ghose advised NCS at Binance Blockchain Week, a worldwide convention of crypto leaders and traders hosted in Dubai in early December.
“You’ve got the leadership of particularly the UAE and also Saudi, who are forward-looking, they’re relatively young in mind and spirit, and they want to adopt and embrace these new technologies,” he added.
But not all international locations in the GCC are embracing crypto: Oman, Qatar and Kuwait have taken a extra cautious strategy, with the latter two putting bans on cryptocurrency and stablecoins.
The crypto market is notoriously volatile: Bitcoin hit an all-time excessive on October 6 of $126,000 per coin, earlier than crashing below $81,000 seven weeks later. Long-time crypto critic Peter Schiff, chief international strategist of asset supervisor Euro Pacific Capital, advised NCS that cryptocurrency’s worth depends on hypothesis and is anxious that authorities help for cryptocurrencies dangers legitimizing what he views as a pyramid scheme.
He believes that the finest use for blockchain is to tokenize gold, an actual useful resource with intrinsic makes use of, slightly than cryptocurrency or stablecoins, the latter of which depends on the worth of a real-world forex.
“Tokenized gold would be real currency. They talk about Bitcoin as ‘digital gold,’ but it’s not — it’s got nothing in common with gold,” mentioned Schiff, who debated tokenized gold and stablecoins at Binance Blockchain Week with Changpeng Zhao, Binance’s co-founder and former CEO. Zhao was pardoned by Trump earlier this year for money laundering violations.
Ghose additionally acknowledges the excessive volatility of crypto however sees authorities intervention as important for mainstream adoption.
“We always have to do things that are regulated: it’s not a nice-to-have, it’s a must-have,” he mentioned.