Crypto Oasis: Dubai’s Blockchain Ecosystem

Members of Durlston Partners recently got to visit and explore what is quickly emerging as a global technology hub, pouring billions and billions of dollars to become a leading destination in the Middle East for technological innovation and entrepreneurship.

Dubai’s tech hub is thriving, but the City had more than that to offer – our team was impressed by the incredibly diverse and multicultural city, offering such innovative ideas and infrastructure that is like no other place on the planet.

It is truly a global metropolis. The government and private investors have invested billions of dollars into building out the city’s infrastructure, real estate, tourism, transportation, and other sectors, for example; Burj Khalifa ($1.5 billion), Palm Jumeirah ($12 billion), Dubai International Airport ($7.8 billion), and the Dubai Metro ($7.6 billion). Important to note that exact figures on total investment can vary.

But this doesn’t necessarily explain the growth of its tech industry. Many individuals within the industry have interpreted this as a result of the pandemic – Dubai largely kept its border open, aggressively vaccinating and introducing visas and other policies that lead to attracting an increasingly mobile international workforce.

With much of Europe and Asia launching lockdowns through multiple waves of Covid-19, Dubai’s mix of relaxed virus policies, low taxes and relatively light business regulation created an attractive environment for technology startups.

The region has never been short on talented entrepreneurs, but the ecosystem is now more vibrant. High-profile purchases of regional companies by global tech players raised the stakes., the Dubai-based e-commerce retailer, was sold to Amazon in 2017 for a reported $580 million. Adding to the momentum, Uber acquired its Middle East and South Asia rival, Careem, for $3.1 billion in 2019. Both deals were widely seen as milestones in the region’s tech scene, and they gave a boost to other entrepreneurs.

While venture capital funding came to the region in 2014, government-backed funds and high-net-worth family offices generally stayed on the sidelines, this has now changed. Mubadala and ADQ in the UAE, and the Public Investment Fund (PIF) in Saudi Arabia have seeded and built an ecosystem of no less than 60 VC funds in the region. In 2019, there were 10, now there are 60.

All this funding and investment means the crypto ecosystem has taken notice. Many major cryptocurrency firms have already made the emirate their home while others plan to move here including, Bybit, Binance, Deribit and others. Recap examines eight key points to determine the crypto-readiness of some of the most populated cities in the world – Dubai has been ranked first in the region and second globally as a cryptocurrency hub.

Dubai is quickly becoming a crypto powerhouse, right in front of our eyes, thanks to its crypto-friendly policies and regulatory stance. A Major factor enticing crypto startups to set up shop is the Virtual Assets Regulation Authority (VARA), which was established in early 2022. VARA is responsible for regulating and supervising virtual assets service providers in Dubai. It aims to provide a regulatory framework that fosters innovation and growth in the virtual assets industry while ensuring that risks are managed effectively.

VARA has taken an incredibly positive stance on the space, granting licenses to major cryptocurrency exchanges such as BinanceKraken Digital Asset Exchange and Bybit, for example. In the case of Binance, the world’s biggest cryptocurrency exchange by trade volume, it has established its regional headquarters in Dubai, where it has more than 200 staff across three offices.

It’s not just exchange platforms that are finding a welcome home in Dubai. Other prominent startups in Emcredit Limited, the company responsible for the development of emCash, and Verify, a distributed reputation protocol that’s building an e-commerce payments platform and reputation tracking system for buyers and sellers.

Evareium, meanwhile, is a project that aims to democratise real estate investments through the use of digital assets and tokenisation. There’s also Loyyal, which is building a blockchain-based loyalty rewards program ecosystem and counts numerous Fortune 500 firms, including Deloitte and IBM, as its customers.

Dulrston Partners is joining forces with 5 new crypto clients in Dubai, thanks to our recent travels, as well as building new relationships and partnering with some boutique Hedge Funds and FinTechs. We are already adding to this growing ecosystem and I hope this article will make some of you consider this as a destination for yourselves. Have a look at this link, if the above made you raise your eyebrows and remember – NO INCOME TAX!

Written by Karolis Kundrotas

📅 This Week in Crypto 📅

The UK could “turbocharge” its crypto sector and be an “innovation hub for the Web3 economy” as part of a vision laid out by cryptocurrency exchange Coinbase. The comments by the exchange coincide with an April 17 Sky News report that the U.K. Treasury is set to revive the Asset Management Taskforce with a focus on developing crypto regulation in collaboration with the private sector.

Artificial intelligence could soon be making waves in the cryptocurrency business, though perhaps not in the way you think. Rather than merging the two technologies, San Francisco-based prime broker FalconX plans to put a chatbot in the co-pilot’s seat for investors. Satoshi (named for Bitcon’s purported founder Satoshi Namakmoto) will be able to generate investment ideas for users based on their historical trading activity, portfolios and interests – and more.

Binance CEO Changpeng Zhao emphasizes the need for a proper understanding of the crypto industry by regulators and active engagement by industry players to achieve regulatory clarity. According to CZ, “There is a very natural tendency to borrow traditional financial industry regulations to apply to crypto. Crypto is different from banks and traditional financial industries.”