As part of its attempts to strengthen its digital economy, Dubai anticipates more than 1,000 Cryptocurrency firms to be operating by 2022.
Dubai and Abu Dhabi free zones have put in place an advanced framework to attract crypto entrepreneurs to set up exchanges while also laying out guidelines to safeguard consumers.
"Five years ago, you wouldn't see individuals coming to Dubai to do cryptocurrency business... we're open-minded, and we're prepared to alter legislation with reason," Dr. Marwan Al Zahrouni, CEO of the Dubai Blockchain Centre, said on Monday during a session hosted during Gitex Global in Dubai.
Consumers and investors are flocking to digital assets as online payments gain traction, and interest in cryptocurrencies and blockchain is booming, particularly in the UAE. According to a poll conducted by Nickel Digital Asset Management in London, an increasing percentage of institutional investors and wealth managers in the UAE intend to increase their exposure to digital assets between now and 2023.
The UAE Central Bank does not licence cryptocurrencies, yet a handful of cryptocurrency exchanges have been granted permission to operate within the financial free zones. The UAE dirham is the country's only legal money recognised by the Central Bank.
The DMCC Crypto Centre, which opened in May to promote cryptography and blockchain technology in Dubai, is home to more than 100 crypto-related businesses, with 900 more applying for licences. In the UAE, there are about 400 crypto firms functioning.
Ahmed bin Sulayem, executive chairman and CEO of the DMCC, believes the UAE will have "well over" 1,000 crypto firms by the end of 2022.
Digital assets, which are based on the secure blockchain database technology, are also gaining popularity among investors because to the potential for significant returns. Experts, on the other hand, have criticised assets such as Bitcoin - the world's largest cryptocurrency – for their volatility.
According to Ralf Glabischnig, founder and board member of Swiss crypto centre CV Labs, the market in Dubai will "expand quicker than anyplace else," and the present interest from investors and entrepreneurs is due to the emirate's economic environment.
"When it comes to establishing a new industry, the most crucial factor is skill. Many brilliant individuals came to Dubai and stayed "He stated. CV Labs has a crypto centre in the DMCC as well.
In response to increased interest in digital assets, the UAE has implemented a number of steps to stimulate trade. The Securities and Commodities Authority struck an agreement with the Dubai World Trade Centre Authority last month to facilitate the trade of crypto assets.
Dubai also held the inaugural Crypto Expo Dubai last week. This comes at a time when investor interest in crypto assets is skyrocketing in the area.
Mid Chains, an Abu Dhabi-based virtual asset trading exchange funded by Mubadala Investment Company, said in September that it has executed its first deals on Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. Rain Management, a Bahrain-based cryptocurrency platform, said earlier this year that trade volumes had surpassed $1 billion.
Bit Oasis, another UAE crypto asset exchange, said earlier this month that it had secured $30 million in a Series B fundraising round to help it expand across the Middle East and North Africa.