The United Arab Emirates (UAE) is home to one of the largest cryptocurrency hubs in the Middle East and North Africa (MENA), an expansive ecosystem which, as of March 2023, comprised more than 1,800 industry organizations encompassing crypto projects and startups, government support agencies, investors and professional services providers, a new report by industry trade group Crypto Oasis shows.
The Spring Edition of the Crypto Oasis Ecosystem Report 2023, released in May 2023, showcases the UAE’s sustained leadership in crypto innovation across MENA and the country’s position as “one of the most profound hubs in the world” in the sector, the report says.
This ecosystem comprises a broad and diverse set of industry stakeholders, it shows, which employ a total of 8,650+ people. 70% of these organizations are “native organizations” and provide crypto products and services, while the rest are “non-native organizations” and are either offering crypto services in complement to their core business proposition or supporting the industry by providing financial backing, venture programs, advisory services, and more.
Notable crypto companies present in the UAE include global exchange Binance, consumer crypto services provider Crypto.com, blockchain protocol Cosmos, and digital asset infrastructure provider Amber Group.
The report shows that the Dubai Multi Commodities Centre (DMCC), the UAE’s largest free-trade zone, hosts the biggest pool of crypto stakeholders in the country. More than 600 organizations are located in the area, among which 550 native companies, the report says.
DMCC is a leading trade and enterprise hub for commodities that’s home to over 22,000 companies. The free-trade zone has a strong track record of using crypto and distributed ledger technologies (DLT) and offers different licensing regimes for companies operating in the sector in addition to favorable taxation policies. The center is also behind the launch of the UAE’s first dedicated crypto hub, a location which provides co-working space and which houses incubation and acceleration programs, crypto advisory practices, and more.
Crypto trading activity in the UAE
The UAE has the highest level of crypto activity in the Gulf and surpasses most of its more populous regional neighbors, data from Chainalysis show.
In MENA, the UAE ranks third for value of cryptocurrency received in absolute terms, securing a total of US$35.23 billion between September 2021 and September 2022.
The UAE trails only Turkey and Lebanon in the region, whose higher cryptocurrency activity is likely linked to economic instability, but is the first country in the Gulf Cooperation Council (GCC).
Centralized exchanges make most of crypto trading activity in the UAE, receiving 66.1% of trading volume during the period, followed by decentralized finance (DeFi), which accounted for 30.8% of crypto trading. That rate is higher than the MENA average, suggesting that DeFi adoption is higher in the UAE than in the rest of the region.
Supportive government initiatives
In MENA, the UAE has been among the most supportive jurisdictions in crypto and blockchain technology. The government has taken several initiatives to promote and embrace the potential of these technologies.
These initiatives include the introduction of regulations governing crypto activities; the launch of the Dubai Blockchain Strategy in 2016, which focuses on enhancing government efficiency, security, and transparency across various sectors; and the introduction of the broader Emirates Blockchain Strategy 2021, which aims to leverage blockchain technology across different sectors, including healthcare, transportation and education.
One major initiative was announced just recently, unveiling the forthcoming launch of the world’s first free-zone dedicated to digital asset companies.
The RAK Digital Assets Oasis, which will be located in the Emirate of Ras Al Khaimah, will open for applications in the second quarter of 2023, becoming the only free-zone in the world exclusively for companies innovating in emerging sectors, such as the metaverse, blockchain, utility tokens, virtual asset wallets, non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), decentralized applications (DApps) and other Web3-related businesses.
The free-zone aims to bolster economic growth and diversification in the Emirate, promote its growing status as a hub for innovation in the UAE, and enhance its competitiveness as an economic and global destination for business.
At the federal level, the Securities and Commodities Authority (SCA) announced in April that it had started receiving license applications from companies looking to provide virtual asset services.
New regulations were issued last year, mandating the SCA to regulate the sector and requiring all virtual asset service providers – except for companies that are already licensed in the UAE’s financial free zones – to apply for approval with the regulator.
Featured image credit: Edited from Unsplash
