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Abu Dhabi, the capital of the United Arab Emirates, wants to become the cryptocurrency center of the middle east and it is working on attracting crypto-focused businesses.
The Chairman of the Abu Dhabi Department of Economic Development, Shorafa Al Hammadi in an interview with Blockworks said the government of Abu Dhabi had set itself a deadline of the end of this year to “ease passporting between digital cryptocurrency exchanges to ‘normal’ instruments.”
Abu Dhabi established an initial framework in 2018, which helped Abu Dhabi become a global leader of a crypto-friendly regulatory environment. According to the CEO of Abu Dhabi’s Financial Services Regulatory Authority, Emmanuel Givanakis. “At that time, the industry was already talking about needing to come under a regulatory umbrella, and we came out with what we think is a fairly comprehensive framework,” Givanakis told Blockworks in the interview.
Binance gets approval in Bahrain to provide crypto services
Last week Abu Dhabi revealed that it has enlisted Binance to help it develop an “international virtual asset ecosystem.” On Dec. 27, 2021, Binance announced that it has also received approval for a license-in-principle in Bahrain.
Matrix Exchange and Midchains are already operating in Abu Dhabi and a third, DEX, is due to commence full operations soon, according to Al Hammadi. Shorafa Al Hammadi, chairman, Abu Dhabi Department of Economic Development said that the whole ecosystem in Abu Dhabi was working together to make it easy for all the actors of that space, to not only attract them but bring them there for the development of a legal framework, to identify the pain points worldwide to mitigate them, and have a very strong robust regulatory framework.
Abu Dhabi focuses on crypto businesses to reduce its reliance on oil and gas
Abu Dhabi wants to reduce its reliance on oil and gas which is why Abu Dhabi is determined to become a crypto hub. The emirate is focusing on innovation in financial technology, providing the private sector with a fintech sandbox where they can test their products in a live environment to ensure they meet the UAE’s strict anti-money-laundering (AML) and other regulatory standards.
“The number-one risk we are focused on is AML, but tech governance systems and controls, protecting client money, custody and exchange-operations risks are all really important risks for us,” Givanakis said. “We needed to develop systems to monitor these frameworks.”
Amy Oldenburg, head of emerging market equities at Morgan Stanley Investment Management, said a challenge for regulators is ensuring they don’t stifle innovation as they try to protect investors. “It’s really important for business operators that the regulators think about…how to allow for innovation and the adaptation necessary as things change,” she told Blockworks in an interview. “The UAE and Abu Dhabi seem to be striking the right balance between putting regulation around [crypto] but not so much that they’re constraining the growth and the exploration that will continue to happen for many years going forward.”
Givanakis said Abu Dhabi’s efforts to ensure it has a comprehensive regulatory framework for a broad range of digital securities, including digital funds and derivative products, are helping it attract international interest. “We’re one of the few places they feel they can establish and people try to understand them and try to understand how to regulate them,” he said.