- The cryptocurrency ecosystem has seen a very bad time in 2022.
- Following a booming period in global cryptocurrency, the UAE sector has seen its changes.
- Dubai and Abu Dhabi have goals to establish themselves as hubs for cryptocurrencies.
Crypto experts believe that the Crypto and Blockchain sector is new and developing, so there will be more startups and closures. The year 2022 has been tough for the crypto market and investors. Several exchanges collapsed, resulting in the loss of life savings of many individuals.
Bad actors targeted several NFT firms and defrauded them of billions of dollars. Investors were deeply affected by all these sad events. Now they are looking forward to something better happening in the industry this year.
The cryptocurrency ecosystem has seen a very bad time in 2022. Following a booming period in global cryptocurrency that has included determined price drops and several high-profile bankruptcies, the UAE sector has seen changes.
Many crypto analysts commented that the bitter fall of FTX awakened several crypto authorities to tighten the regulation of crypto assets and exchanges. FTX, one of the greatest cryptocurrency exchanges, fell in late November last year and filed for bankruptcy under chapter 11.
FTX was valued at US$32 billion before the collapse. However, the exchange went void after it was revealed that SBF and other significant insiders were using billions of dollars in customer funds for various criminal practices.
Reportedly, Kraken, another of the global largest cryptocurrency exchanges, has suspended its United Arab Emirates currency functioning to focus on its “most mature” markets just 10 months after launching on the Abu Dhabi Global Market (ADGM). The firm officially suspended its AED services in the UAE earlier this month.
Will the UAE be affected by it?
The question is, how meaningful are these changes for the UAE’s crypto scene, keeping in mind that Dubai and Abu Dhabi have goals to establish themselves as hubs for cryptocurrencies?
The chairman of the Crypto and Blockchain Association, MEAACBA (Middle East, Africa and Asia) said, “There will always be change in crypto blockchain because it is a new and developing sector; however, it is very important not to focus on crypto-exchanges.”
Mr Awan continued that the gulf country is a hub of innovation for the crypto-blockchain ecosystem, from regulation to support and education. He also added, This outlook is helping to encourage the sector across the region. Countries such as the KSA (Kingdom of Saudi Arabia) are actively looking at the potential benefits of including central bank digital currencies (CBDCs), but each country will need to move forward at the pace it is most comfortable with.
The exit of FTX and Kraken from the UAE could leave a huge opportunity for those who remain; the most obvious example is the well-known cryptocurrency, which in March 2022 got its first license in Dubai and its financial services permission from Abu Dhabi in November.
According to the Managing Director of online brokerage XTB MENA, Achraf Drid, being the last operating company in a niche region is a great opportunity to effectively build brand awareness, expand operations and attract partners and customers.
Dubai’s new regulations on virtual assets
Dubai regulators announced new rules and regulations for virtual assets on February 7, 2023. The UAE’s VARA (Virtual Assets Regulatory Authority) released these new guidelines.
In the report, the VARA mentioned very clearly that all the companies working with virtual assets and traders investing around $250M or more in cryptocurrencies must be on the list of VARA.