Insights from Dubai’s cryptocurrency scene

Insights from Dubai’s cryptocurrency scene

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In an interview with Forkast’s Maha Shah, Ghassan Jumblat, director of fintech at financial services company Integrated Communications Channel, spoke about the steps taken by the United Arab Emirates to establish a regulatory framework for cryptocurrencies, the Blockchain Strategy of the Emirates 2021 and the Dubai Multi Commodities Center ( DMCC) Crypto Center.

Jumblat, whose company is registered with the DMCC, said the UAE government’s open-door policy towards competition and innovation will prove beneficial to local blockchain and cryptocurrency startups.

The following questions and answers have been edited for clarity and length.

Maha Shah: There is a lot going on in the region. You have just been at the Dubai Fintech Summit. What were the topics covered there?

Ghassan Jumblat: The UAE has been working to create a regulatory framework for cryptocurrencies and the blockchain. In 2019, the UAE launched the Emirates Blockchain Strategy 2021, which plans for 50% of government transactions to take place on blockchain. We also have the Dubai Multi Commodities Centre. It launched its own crypto product in 2021. The DMCC also launched DigitalSugar, a blockchain-based platform that allows sugar to be traded on a digital platform.

The DMCC Crypto Center will support crypto and blockchain technologies and promote global trade through Dubai. The UAE has its own cryptocurrency exchange called bitoasis. It is built on top of the blockchain to help users exchange cryptocurrencies. ArabianChain is another UAE-based blockchain startup, a public blockchain for the Arab world.

Cha: There is the VARA of Dubai [the Virtual Assets Regulatory Authority] and then there is ADGM [Abu Dhabi Global Market] free zone. What are the strengths and weaknesses of these two regulators, especially from a currency perspective?

Jumblat: They complement each other. Both have the same concept of promoting digital cryptocurrencies and virtual assets, protecting the investor and promoting responsible business growth.

You can see how VARA is creating appropriate laws and regulations that define virtual assets, and you see the same thing happening in Abu Dhabi. There is definitely coordination between them and the sharing of knowledge of mistakes and how to do things better and more efficiently.

Cha: How could Dubai’s strategic location position it as a leading hub or at least a major hub for digital assets in the future?

Jumblat: In March 2022, the Dubai law regulating virtual assets came into force. The law created VARA as a regulatory body and empowered VARA to create appropriate laws and regulations. VARA also defines virtual assets. They identified services that require licenses. I see Dubai as a global hub for digital assets. They are doing it responsibly.

Hong Kong recently announced opening up to retail investors in its new crypto regulatory regime. So Hong Kong is now considered a digital asset friendly jurisdiction because they included the retail investor in the regime. Additionally, Hong Kong recently tokenized green bonds, the first authority to do so in the world.

I would say that Dubai will definitely be a global hub in its region with Hong Kong in Asia.

Cha: There are also bad actors. FTX also obtained a VARA license. Are the authorities now closing loopholes in the licensing laws?

Jumblat: There are definitely bad actors out there and VARA and other regulators are doing everything they can to educate people. Public education is very important.

And when it comes to digital asset adoption, you need to get teens involved. I will give you an example. Last Christmas my wife asked my son what he wanted for Christmas and he said assets in the popular online game Fortnite. It took my wife two or three days to understand the idea of ​​buying her something that she can’t touch.

Industries like gaming, fashion, and music can help teens understand what digital assets are and make them widely accepted. Of course, care and due diligence must be done when sharing financial or other information.

Cha: Tell us about the UAE Digital Dirham or CBDC. Do you think that will come out soon? What use cases do you expect to emerge from Dirham Digital?

Jumblat: The most recent plan is to introduce the digital Dirham in mid-2024. One thing to know about the digital Dirham is that it is backed by the government. So, I for one is risk free. It is issued and guaranteed by the central bank and serves as a safe, profitable and efficient payment.

Instead of having a credit card, you will have a wallet that has digital Dirham backed by the central bank.

The Digital Dirham will be available for most household payments, supermarkets, schools, restaurants, anything in the mall. When it comes to cross-border payments or online purchases outside of the UAE, you will need some kind of contract with other countries or with other big retailers like Amazon, Google Pay or Microsoft to use Digital Dirham.

I recently told my boss that when Dirham Digital comes, I will accept 50% of my salary in Dirham Digital and that percentage could grow when the adoption rate increases. So it’s out there. The plan is there and I think it’s just a matter of time.

Cha: The United States is cracking down on cryptocurrencies and most exchanges are looking for friendlier jurisdictions. Do you think the United Arab Emirates will favor local exchanges or allow foreign competition to enter?

Jumblat: The UAE is built on not being a closed environment, so it definitely encourages competition. Like Binance, it has been around since day one.
Competition at the local level is also encouraged, as well as support for blockchain and cryptocurrency startups. Locals are more likely to use local Dubai exchanges. People who come and work in Dubai and their work involves moving around regions, can favor international exchanges.

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