Crypto investments have been gathering attention in the Middle East, and developments in this space have been especially accelerated in the UAE over the past few years.
According to a 2021 YouGov survey, one in four people in the UAE see crypto assets as an exciting investment opportunity, with 44% comfortable to invest over 5% of their portfolio in crypto.
Crypto was especially popular amongst 18-24 year olds and Emirati locals, the survey also found. Both these demographics, while interested in buying crypto, are not too keen on regulation either (just 10% of 18-24 year olds and 7% of Emiratis want crypto to be heavily regulated).
Elsewhere, opinions from the ground also suggest that the market is growing rapidly. MENA-based crypto trading platform BitOasis reported that its transaction volumes for H1 this year surpassed US$3 billion, with users growing by 2x.
Meanwhile, CEO of Bittrex Global called the UAE a “great place to set up your token project, or run a cryptocurrency exchange,” highlighting tax benefits in the country.
By 2022, it is anticipated that there will be over 1,000 crypto businesses operational in the UAE, buoyed primarily by interest from institutional investors and wealth managers.
UAE authorities create buzz around crypto investments
Although crypto is not legal tender in the UAE, local authorities have taken multiple steps towards boosting the attractiveness of crypto investments in the country.
The latest of these is the Dubai Financial Services Authority’s (DFSA) regulatory framework for digital assets, published on 25 October. The framework is the first of two phases of the DFSA’s digital assets regulatory regime.
The UAE’s Securities and Commodities Authority (SCA) published its licensing regime for crypto assets last year. The regime covers initial coin offerings, crypto exchanges and marketplaces, crowdfunding platforms, custodians, and related financial services. Draft regulations had been published in 2019 for industry feedback.
Abu Dhabi’s Financial Services Regulatory Authority (FSRA), slightly ahead of the SCA, had published its crypto regulations way back in 2018. This made the FSRA the earliest Middle East jurisdiction to respond to the crypto boom positively. The regulatory framework is directed at crypto asset businesses, including exchanges, custodians and other intermediaries.
Elsewhere in Dubai, multiple free zones have been approved for crypto trading.
The Dubai World Trade Centre (DWTC) Authority recently gained approvals for crypto trading in its free zone. Approvals were provided by the SCA, which will monitor crypto issuance, offering, listing, and trading at the free zone, and undertake licensing and inspection as well.
The Dubai Airport Free Zone Authority signed a similar agreement with the SCA in March this year, according to an earlier statement.
The DWTC also recently struck a partnership with Bahraini crypto trading platform CoinMENA to build a crypto and blockchain hub.
The Dubai Multi Commodities Centre, another free zone in Dubai, also set up a crypto centre in March this year, for the development and application of crypto and blockchain.
Making crypto investments in the UAE
Global platforms such as Binance and Kraken are accessible to investors in the UAE, but direct withdrawals from these accounts to UAE banks is a challenge. Investors can, however, turn to local platforms, of which there are plenty.
Two of these have already been mentioned – BitOasis and CoinMENA. BitOasis is a UAE-headquartered platform that provides free access to over 20 cryptocurrencies, including Bitcoin, Ether, Litecoin, and Tezos. Users of the pro version gain access to over 30 cryptocurrencies and fiat pairs, although the platform currently only supports transactions in AED and SAR.
CoinMENA, headquartered in Bahrain, provides access to 10 cryptocurrencies, including the stablecoin Tether. The platform is Sharia-compliant. The platform works as an exchange, and also provides over-the-counter trading for transactions of bigger values.
Rain is another Bahraini platform accessible to UAE crypto investors. In addition to BHD and AED currencies, the platform also supports SAR, KWD, OMR and USD as well. Rain can be used both by individual investors as well as institutional players.
For those interested specifically in Bitcoin, Dubai-based Sarwa offers a Crypto Portfolio. The portfolio includes ETFs from their other portfolios, but come with a 5% allocation to Bitcoin through the Grayscale Bitcoin Trust.
International trading service providers such as Bitex and Saxo Bank have also forayed into providing localised crypto trading services to investors in the UAE.
Overall, avenues are available, and are becoming more accessible and simplified, for UAE-based investors looking to make crypto investments.
Going by the number of homegrown platforms popping up and regulator-led initiatives being rolled out, crypto investors in the UAE will have no dearth of options, despite global friction over legalising cryptocurrencies.
Featured image sources: Unsplash, Freepik