How crypto adoption is driving UAE’s digital economy

By Puja Sharma

According to the report, the UAE has a higher level of trust in cryptocurrencies than any of the other 17 markets examined, with two-thirds of UAE residents declaring an interest in investing in or trading crypto in the next five years.

Cryptocurrencies are becoming more popular in the seven emirates that make up the United Arab Emirates. More than one-third (35%) of small business owners in the UAE surveyed in Visa’s Back to Business Global Study – 2022 SMB Outlook said they would accept some form of digital payment this year, including cryptocurrencies like Bitcoin, according to the report by Capital corn bel.

In addition to goods, Emiratis can purchase services with digital currency. The Dubai-based international school Citizens School says it will accept tuition payments in bitcoin and Ethereum in September when it opens its doors to its first intake of students.

Regulators in the United Arab Emirates are taking a different approach to ban Bitcoin (BTC) and digital assets than those in many other countries. Through the provision of frameworks to guide crypto businesses on how to follow the laws, the country has consistently worked towards becoming a blockchain capital.

There are two jurisdictions in the UAE: the mainland, where the Securities and Commodities Authority (SCA) is the regulator, and free zones, which are geographically defined areas with relaxed tax and regulatory regimes.

Such free zones include the Dubai International Financial Centre (DIFC), which is regulated by the Dubai Financial Services Authority (DFSA), Abu Dhabi Global Markets (ADGM), which is regulated by the Financial Services Regulatory Authority (FSRA), and the Dubai Multi Commodities Centre (DMCC), which falls under regulatory remit of the SCA.

Higher trust in crypto

According to the report, the UAE has a higher level of trust in cryptocurrencies than any of the other 17 markets examined, with two-thirds of UAE residents declaring an interest in investing in or trading crypto in the next five years.

UAE received more crypto than any other Middle Eastern country, except Turkey, according to Chainalysis 2021 Geography of Cryptocurrency Report. A large number of the Middle East’s remittances come from the UAE, where migrant workers send money home, making it the third-largest source of remittances in the world.

In light of the high level of public trust in cryptocurrencies highlighted in the YouGov study, it appears the UAE government and regulators are doing a good job at promoting the emirates as a location for crypto businesses. This is also supported by several exchanges choosing to set up operations in the emirates.

Relocation of exchanges to Dubai

Earlier this month, the emirate of Dubai was confirmed as the new regional hub for Bybit’s business and rival bourse Crypto.com. Provisional approval was also received by BitOasis in March from the newly established Dubai Virtual Asset Regulatory Authority and virtual licenses were granted to Binance and FTX Europe.

A decision by India to tax cryptocurrency earnings at 30% is also expected to encourage some Indian exchanges to follow Polygon‘s example and relocate their operations to the UAE.

As the director of regulatory affairs at blockchain technology company ConsenSys, Bill Hughes explains, the UAE takes a different approach than most countries by clearly signalling to the global crypto industry that it is the place to be. It is passing straightforward regulations that allow for easier registration for many crypto businesses than they would experience elsewhere.