In 2022, the financial services industry in the Middle East underwent a significant transformation. In addition to other trends, the changes can be seen due to cryptocurrencies, digital payments, and BaaS (Banking as a service). The market for cryptocurrencies is growing around the globe and is even predicted to supplant established financial institutions eventually.
Dubai has grown into a significant hub for cryptocurrency activity. While other cryptocurrency businesses are finalizing their relocation plans, a few have opened headquarters in Dubai. The United Arab Emirates government has put in place progressive regulations for creating and using digital assets.
As a result of its favorable tax policy, progressive legislation, and robust economy, the country has the perfect environment for the development and growth of its local crypto industry.
Regulatory Landscape and Licensing Requirements for Crypto Exchanges in UAE
By 2021, 50% of government transactions will be done using blockchain as part of the UAE’s UAE Blockchain Strategy 2021, which aims to make the country a blockchain technology pioneer. Regulations on using crypto assets, including cryptocurrency, have now been released to further their objectives.
The Financial Services Regulatory Authority (FSRA), an Abu Dhabi free zone’s financial watchdog, is the first regulatory authority in the UAE to set forth specific criteria and limitations on engaging in cryptocurrency-related activities. ADGM is an Abu Dhabi-free zone.
The FSRA’s new rules for the turnaround of initial coin or token offerings and digital currencies covered initial coin offerings (ICOs), in which cryptocurrencies are made available for sale to the public (under its Financial Services and Market Regulations).
The Securities and Commodities Authority (SCA) and the Dubai Financial Services Authority (DFSA) are two other regulatory bodies that could influence the UAE crypto exchange.
When operating with cryptocurrencies in the UAE, the Dubai Multi Commodities Center (DMCC) Free Zone is a location worth considering. The DMCC cryptocurrency license will ensure your company’s legitimacy. A comprehensive business plan and EUR 15,000 share capital for the applicant company are essential prerequisites for obtaining a permit.
Currently, there are no residency restrictions for bringing such a license. The license holder may conduct business without limitation if the procedure is completed.
For a local business, the following documents are necessary to receive the license:
- Identification
- Verification of the registered address of residency
- A document confirming the new company’s name
- A detailed plan for developing a business.
Investment Opportunities in the Crypto Space in UAE
Here are some of the top cryptocurrency initiatives in the UAE, along with what makes them appealing:
- Tamadoge (TAMA)– A recently introduced coin called TAMA has the potential to top all other meme coins worldwide. Investors looking for the project which is the best crypto exchange in UAE should choose it
- Battle Infinity (IBAT)– IBAT’s increased interest in the coin indicates why it’s one of the top 2022 cryptocurrency presales. Within 24 days after its inception, the presale was sold out. PancakeSwap listing is the next stage for IBAT. On August 17, 2022, IBAT will be listed on PancakeSwap
- Lucky Block (LBLOCK)– LBLOCK stands out among the best cryptocurrency initiatives in Dubai. The resource is one of the essential tokens in the online gaming industry and supports the Lucky Block ecosystem. It has also been among this year’s most promising new coins
- Ethereum– Among cryptocurrencies, Ethereum is one of the most widely used. It is the second most commonly used cryptocurrency after Bitcoin. It is thus not surprising that it is on the list of top Dubai crypto projects
Cryptocurrencies have two advantages: cheaper and faster money transfers and decentralized systems without a single point of failure. A few disadvantages of cryptocurrencies are their volatile values, significant energy usage during mining, and use in illicit activities.
Best Practices for Investing in the Crypto Space in UAE
Here are some steps for avoiding or minimizing risk when investing in crypto:
- Thorough Research: It is good to read and comprehend a digital currency before succumbing to the urge to invest in it. Refrain from letting your laziness cause you to lose money
- Make sure you have enough cash: Invest if you have the necessary funds and if that will be needed later. Only consider borrowing money to make cryptocurrency investments
- Observe: Cryptocurrency exchanges are only partially secure. As a result, considerable vigilance must be kept at all times. Read about the situations that led to other people being conned so that you don’t
- Update your market analysis: It is essential to be alert and comprehend the industry’s direction constantly. You will only experience disappointment if you base your decision on a token’s unit price. You should eventually be able to gauge market sentiment
Cryptocurrency has demonstrated a high level of volatility. Before investing in the cryptocurrency exchange in UAE, a person should thoroughly analyze the risks involved. The investor should ensure he has conducted all necessary market research and developed a sound risk management strategy.
Conclusion
UAE is one of the most attractive locations for crypto investors, combining favorable tax policies with progressive regulations and a robust economy to provide the ideal atmosphere for developing and growing its local crypto industry.
As part of the 2023–2026 strategy, the central bank of the United Arab Emirates has declared that by 2026, it will introduce its first digital currency. They hope to place themselves among the top 10 central banks in the world with this action.
A concept to turn the Dubai World Trade Center into a crypto zone has been developed by the Dubai World Trade Center Authority (DWTCA) and the UAE Securities and Commodities Authority. It will draw fresh cryptocurrency opportunities and help the crypto exchange in UAE to have a successful future in the sector.
