On Wednesday, an economic free zone in Dubai took another step toward becoming a global hub for the cryptocurrency industry when it inked an agreement with the UAE’s Securities and Commodities Authority (SCA) to trade crypto assets.
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The oil-rich country has said that cryptocurrency will be integral to its ambitions to double its economy over the next decade.
The agreement creates a framework for the Dubai World Trade Centre Authority (DWTCA) to license and acquire approvals for all cryptocurrency-related activities in the free zone. This will include issuing, listing, licensing and trading crypto.
“The SCA will be responsible for the regulatory supervision of offering, issuing, trading and listing crypto assets and the licensing of financial activities related to them within the limits of the DWTCA free zone,” the acting chief executive of the SCA, Maryam Al Suwaidi, told local media.
The Gulf kingdom is hoping to leverage blockchain technology and cryptocurrencies in its quest to pursue a digital transformation. At the moment, the UAE’s digital economy generates $27 billion and constitutes 4% of the country’s GDP. As more crypto companies base themselves in Dubai’s free zone, however, the emirate hopes to build a sustainable ecosystem for the industry’s growth and expansion and capitalize on the success of NFTs in global commerce.
Currently, the UAE Central Bank does not license cryptocurrencies and the country only accepts the UAE dirham as legal tender. Abu Dhabi Global Market is, however, home to myriad crypto exchanges and the wealthy emirate already has a blockchain adoption strategy that it hopes will save the federal government 11 billion dirhams in financial transactions, along with 77 million work hours.
Crypto is also growing increasingly popular among investors in the UAE. A recent survey by the UK-based Nickel Digital Asset Management said that half of the investors in the UAE aim to increase their exposure to cryptocurrency assets by 2023.
In April, 3iQ, the Canada-based digital asset management company, secured a regulatory clearance to list the first indexed crypto fund in the Middle East on Nasdaq Dubai. The public Bitcoin fund holds approximately $1.5 billion of assets under its control.