April 11, 2022

Dubai: The evolution of the Crypto Oasis

As crypto has dominated headlines around the world, the crypto community has been seen to congregate at specific locations. Alongside the stalwarts of San Francisco and Switzerland, recent years have seen Dubai emerge as a genuine crypto hub. This hasn’t been a game of chance. Equipped with a clear regulatory environment, a rich talent pool, apro-business ecosystem and a friendly tax framework, Dubai has caught the attention of the global crypto community, and has succeeded in creating a welcoming environment to crypto founders, employees and companies alike. There are several contributing factors leading to its success:

Ecosystem support

When setting up a new crypto enterprise, it is helpful to know that the UAE runs a number ‘Free Zones’, where non-residents and non-citizens are enabled to set up companies with visas and trade licenses. The DMCC, or the Dubai Multi Commodities Centre, hosts a dedicated Crypto Centre, while Free Zones at the Airport and the Dubai World Trade Center have crypto-specific guideline sin place. Moreover, companies based here do not pay any taxes and are able to sponsor visas for founders, employees and even their families.

Regulatory Clarity

Regulating crypto in 2022 remains a challenge, even 13 years after launch of the Bitcoin whitepaper. Legislation is mixed, with countries like China banning the mining of Bitcoin, and the US seemingly changing its stance on a regular basis. In this confusing landscape, the regulators of the UAE formed VARA  (Virtual Assets Regulatory Authority) a dedicated body for the regulation and oversight of virtual assets. VARA is tasked with authorizing virtual asset service providers and regulating the sale of virtual assets in free economic zones, creating a simplified regulatory solution for digital assets, that is also compliant with global regulators, such as FATF.

Investor safety

The Dubai Virtual Asset Regulatory Authority (VARA) was also set up to safeguard investors while also ensuring a compliant business environment for virtual assets. Collaborating with the private sector, Dubai has worked to ensure an attractive environment for crypto, while also enforcing rigorous standards for investor protection, Anti-Money Laundering and Counter Terrorism Financing. With this strong framework to ensure compliance, Dubai has prioritized investor safety,while also creating an environment that facilitates innovation.

Training Crypto Talent

Part of the problem around blockchain adoption stems from a lack of knowledge. To address this gap, the Dubai Blockchain Center was set up in 2018,offering a certification program for professional development. The University of Dubai and University of Wollongong also offer a programs for blockchain fundamentals and development, adding to the rich talent pool in Dubai.

Emerging Industry Trend

Major industry players like Binance and FTX have recently set up operations in Dubai, actively seeking out locations providing regulatory clarity and ecosystem support. FTX gained a Virtual Asset Exchange(VAX) license issued under VARA, while Binance was granted a license to be the first anchor tenant in Dubai World Trade Centre, an economic free zone. Similarly, major industry VCs like Silicon Valley-based Draper Goren Holm and the Woodstock Fund have opened offices in Dubai, seeking out the most exciting new opportunities. Unsurprisingly, crypto start-ups have followed suit, with the DMCC hosting over 230 crypto start-ups in March 2022.

The dedication of the government towards the development of the Crypto Oasis is clear, perhaps exemplified by the issuance of NFT stamps to commemorate their 50th anniversary. Prioritizing regulatory clarity and investor safety, while providing infrastructure and ecosystem support, Dubai has cemented its position as a true Crypto Oasis, and certainly a destination to keep an eye on as the market continues to grow.

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