The Middle East is becoming a crypto hotbed as big global crypto exchanges move into the UAE. Leading the region is Dubai, welcoming global cryptocurrency exchanges with open arms. The region is focused on taking the front row seats in the cryptocurrency industry, which explains why they are building a business-friendly ecosystem lined by firm regulations that will serve as an enabler for attracting, retaining and promoting high-growth companies.
According to the Dubai World Trade Centre Authority (DWTCA), they are committed to becoming a crypto zone as well as a regulator for digital currencies as part of the UAE’s vision to attract fresh business to counter the tight regional competition.
DWTCA is a free zone in the United Arab Emirates and crypto players can easily secure approval and licensing to offer cryptocurrency-related financial activities. More free zones have committed to doing what the DWTCA has promised, including the Dubai International Financial Centre (DIFC), who has already gone live with the first part of their regulatory framework to govern digital tokens.
Crypto exchanges that have moved to Dubai
1. Bybit
Based in Singapore, Bybit announced late March about their plans to shift their headquarters to Dubai and have recently commenced with their operations. Supporting this move by the crypto exchange, the UAE Minister of State for Foreign Trade and Minister in charge of Talent Acquisition and Retention, Thani Al Zeyoudi, explains that Bybit’s decision to open its global headquarters in Dubai is a milestone in the government’s efforts to position the UAE as an international digital hub.
It should be noted that Bybit has already acquired an in-principle approval and can therefore legally perform all digital asset operations in Dubai. The exchange expects to contribute to the country and the industry, as an enabler for innovation in the realm of virtual assets throughout the emirate’s most exceptional and vibrant economies.
It follows that the in-principle approval provides for a very unique opportunity for the exchange to support the UAE as well the entire region’s vision of becoming a worldwide virtual assets technology hub.
2. Binance
Binance is also part of the crew, having secured licenses to operate in the city of Dubai. In its revered position as the world’s grandest cryptocurrency platform, Binance has committed to supporting the development of digital assets in Dubai. To this end, the exchange partnered with the DWTCA towards establishing a global virtual asset ecosystem.
Speaking for itself, the goal of this new collaboration is to help cryptocurrency exchanges as well as businesses offering blockchain and DLT services to secure their own licenses in Dubai.
Binance CEO, Changpeng Zhao, assured that they will leverage the company’s leadership position as well as their expertise and marry this to the long-term vision that has been displayed by Dubai and the UAE at large. This is towards a common effort to develop a regulatory structure good enough to match the fast-paced and progressive nature of digital assets.
3. Crypto.com
Another Singapore-based crypto exchange that expressed interest in the UAE was Crypto.com, who are planning on setting up a regional hub in Dubai. Supporting its presence in the UAE, the exchange is focused on achieving a value-adding and all-fulfilling presence in Dubai. One endeavor to this effect is the starting of an active recruitment program. The incoming staff will be the company’s muscle to help serve and address the needs of its massive customer base of up to 10 million people spread all over 90+ countries.
These crypto exchanges stand among the most recent additions to a growing assortment of crypto-associated businesses who are spreading their reach in Dubai.
4. FTX
The European affiliate of cryptocurrency trading platform, FTX, has also revealed plans to have a regional office in Dubai. The exchange has already secured a virtual asset license in Dubai with FTX Europe being among the very first attenders at the DWTC.
The move follows the company’s intention to offer technical cryptocurrency-derivative products with centralized counterparty clearing for the benefit of institutional markets. The assurances offered by Dubai to FTX about its digital asset-related financial operations in Dubai are indeed valid. This has allowed FTX to safely move forward with their general strategy of developing towards a unicorn status as a virtual-asset service provider to venture into global markets on a full throttle.
5. WazirX
The Indian cryptocurrency exchange has also moved to Dubai, a decision supported by the founders because of their intention to pursue new opportunities. Nischal Shetty and Siddharth Menon announced their commitment to capitalize on the enabling environment that the pro-cryptocurrency government of Dubai is offering.
WazirX joins other exchanges who have been attracted by what Dubai is offering, with a special interest in the laws that facilitate crypto-based business.
How the government of Dubai plans to manage the influx: Dubai Virtual Asset Regulatory Authority (VARA)
To manage this influx of interest by crypto exchanges, the government of Dubai has established a regulatory board to monitor the whole operation. Under this new development, the Virtual Asset Regulatory Authority (VARA) is tasked to regulate the digital asset market. The move is a mimic of actions by neighbors such as Singapore, who have made attempts to regulate certain areas in the crypto sector.
Sheikh Mohammed Bin Rashid, the ruler of Dubai, communicated the Emirate’s enactment of a pioneer law to govern virtual assets. He also asserted the introduction of a principal regulation, the Dubai Virtual Asset Regulation Law, meant to grow Dubai and the UAE as regional and international go-to hubs for crypto users. As a regulatory body, VARA controls the development of the virtual asset business ecosystem in areas of regulation, licensing, and governance.
Singapore for instance has a recent history imposing guidelines that prohibited crypto companies from advertising their services to the general public on grounds that crypto is a very risky space that is not ideal for the general populace.
But why is this happening now? Some market experts say that this is due to the tough restrictions from other regions like the West and Asia. Binance, for instance, has been a victim of financial regulators the world over, bombarding the exchange with different blows, including a ban on some activities. Binance has also complained of certain regulators warning consumers of using an exchange that is not licensed within their region.
Among the factors that has prompted the decision to shift from India is the fact that the government has introduced a 30% tax on virtual assets. The decision became effective from April 2022, stamping that income generated from the transfer of virtual assets or crypto will be taxed even if the taxpayers’ total income is below the threshold limit of 2.50 lakh rupees, for the case of India and WazirX. At the same time, there would be no exemptions for deductions apart from where cost of acquisition is concerned when taxable amount is calculated.
Becoming a global crypto hub
The warm reception that the exchanges are receiving in their entry to the UAE follows the region’s drive to become a global cryptocurrency hub. One of the main ways to achieve this ambition is establishing new regulations that will make the playing field accommodative and conducive for these companies, without disrupting the region’s financial standards and legal expectations. By attracting some of the world’s biggest cryptocurrency exchanges, Dubai and the UAE at large are already headed in the right direction.