The United Arab Emirates (UAE) is eyeing to move past other jurisdictions and become the global hub for digital currencies, buoyed by new regulatory frameworks and high-level private sector partnerships.
Ghassan Jumblat, fintech director at Integrated Communication Channel, disclosed in an interview with Forkast News that the UAE is inching its way to becoming a leading hub for digital currency. The blueprint for the UAE’s digital currency dominance began in 2019 when the government launched the Emirates Blockchain Strategy.
The ambitious plan sought to transfer 50% of all government transactions to the blockchain, a clear statement of intent for its digital currency goals. Jumblat said municipal governments in the UAE also share the same burning desire to speed up the adoption of digital currencies.
He cited Dubai’s Virtual Assets Regulatory Authority (VARA) and the Abu Dhabi Global Market (ADGM) as proof of the local government’s seizing the initiative to promote the asset class.
“You can see how VARA is creating appropriate laws and regulations defining virtual assets, and you see the same is happening in Abu Dhabi,” Jumblat said. “There is definitely coordination between them and sharing of knowledge of mistakes and how to do things better and more efficiently.”
The geographical location places it in a prime position to cater to markets in North Africa, Europe, and Asia, and at the fore of the push is Dubai, according to Jumblat. Since launching VARA, several global digital asset exchanges have debuted in the city to offer their services, but FTX’s 2022 collapse shook the local ecosystem to the core.
“Definitely there are bad actors and VARA and other regulators are trying their best to educate people,” Jumblat noted.
FTX’s collapse stoked fears about whether Dubai’s digital currency regulators will tighten the licensing screws for global firms in favor of local exchanges. However, Jumblat says that “a closed environment” for business is alien to the UAE, and global exchanges will be given a level playing ground.
Two-horse race with Hong Kong
Recent developments have seen Hong Kong rise to prominence in the digital currency industry following the government’s plan to attract top industry players to the region. Recently, regulators have issued a green light for retail investors to access digital currencies on approved exchanges.
Hong Kong’s authorities expect 80 digital currency and fintech firms to seek licenses in the country while pledging full banking industry support for approved companies.
Despite forays into digital currencies, both Hong Kong and the UAE have indicated an interest in central bank digital currencies (CBDCs), even collaborating on cross-border settlement functionalities.
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