With almost 3 million users – around a third of the UAE’s population – the country is already the world leader in cryptocurrency adoption. Yet, the UAE aims not only to use digital currencies but also to become the crypto capital of the planet.
In addition to implementing a broad regulatory framework for the crypto industry and launching a dirham-backed stablecoin, the country this year issued Binance’s first global license to the Abu Dhabi Global Market (ADGM) – the capital’s special economic zone.
“Our global users are now confident that we are under the regulatory oversight of ADGM,” Richard Teng said in a CNN interview.
In recent years, transparent regulatory measures have made cryptocurrencies more attractive to companies such as Binance, as a mature regulatory environment promises faster development of financial markets – increased capital formation and the creation of the fastest financial center in the world. This opens a very favorable field for business development in the region, he noted.
“There is a very favorable business climate in the regulatory environment,” he added. “Regulators here started regulating cryptocurrency about seven years ago… it’s the fastest growing capital market and global financial center, so it’s a very favorable environment for us to grow our business here.”
By some estimates, UAE sovereign wealth funds hold assets of around $2 trillion and are actively investing in decentralized models of digital finance to enrich the economy, reduce dependence on fossil fuels and the US dollar, and simplify banking and intergovernmental operations.
“In Dubai and Abu Dhabi, a very successful crypto and blockchain ecosystem is growing,” said Ronit Ghose, head of the future of finance at Citi Global Insights.
While the UAE is leading initiatives in digital finance, other GCC countries are also exploring these technologies: Saudi Arabia is focusing on blockchain and Bahrain is considered one of the “leading” countries in implementing cryptocurrency rules, according to discussions held during Binance Blockchain Week in Dubai in early December.
“There are leaders, particularly from the UAE and Saudi Arabia, who are visionary, young at heart and eager to adopt and implement these new technologies,” he added.
But not all GCC countries are getting into crypto: Oman, Qatar and Kuwait are taking a more cautious approach, with the latter two having imposed bans on cryptocurrency and stablecoins.
The cryptocurrency market is known for its high volatility: Bitcoin reached a high of around $126,000 per coin in October, but within seven weeks it fell below $81,000. Peter Schiff, chief global strategist at Euro Pacific Capital, told CNN that the value of cryptocurrencies often depends on speculation and that government support could legitimize what he calls a pyramid scheme.
He said the best use of blockchain is to symbolize gold, a real resource with intrinsic value, rather than cryptocurrency or stablecoins which depend on the value of real money.
“Tokenized gold would be a real currency. They talk about Bitcoin as ‘digital gold,’ but it’s not – it has nothing in common with gold,” said Schiff, who discussed tokenized gold and stablecoins at Binance Blockchain Week with Changpeng Zhao, the co-founder of Binance. Zhao was pardoned by Trump earlier this year for violating money laundering laws.
If Schiff doubts the longevity of cryptocurrencies, Ghose emphasizes that regulation is an essential condition for their widespread adoption.
“We must always operate within a regulated regime: it is not a ‘nice to have’ but a necessity,” he said.
Going forward, a regulated and transparent model could position the UAE as a global hub for digital finance, while supporting the growth of cryptocurrencies and digital payments in the region.
