Factors Responsible for the Recent Increase in Blockchain Activities in Dubai
Increase in the Number of Cryptocurrency Exchanges
LBank is one of the oldest cryptocurrency exchanges that has its headquarters in Dubai. It was founded in 2015 and is presently ranked on the 21st position in CoinMarketCap ranking of cryptocurrencies. It conducts over $1.792 billion transactions in the past 24 hours. Ever since then, other cryptocurrency exchanges like Binance, Bybit, FTX, Crypto.com, Kraken have also established regional headquarters in Dubai.
Binance in December 2021 signed a Memorandum of Understanding (MoU) with the Dubai World Trade Center Authority (DWTCA) to operate a virtual asset hub. By March 2022, the exchange received the license to operate in Dubai. Binance CEO Changpeng Zhao believes that Dubai is the Wall Street of Crypto. The likes of FTX, Kraken, and Crypto.com exchanges also gained licenses from the Dubai authority to operate Virtual asset trades.
Increase in the Number of Investors
The agreement signed by Dubai Airport Free Zone Authority with the Securities and Commodity Authority has opened the city to investors. This is due to the listing of Bitcoin Fund on the Dubai NASDAQ trading platform. This has given investors who wish to trade the largest Cryptocurrency Bitcoin on a legal platform with no restrictions to do so. A study by International Market Research firm, Toluna in 2021 shows that 78% of UAE residents want to increase their investment in crypto and that 25% of all investable assets in UAE are targeted at cryptocurrency projects. Also, the Global Financial Center Index (GFCI) in its report in July 2021, ranked Dubai as the eighth-most investment-prone location in the world. This is its best ranking that was enhanced by investment attracted from the blockchain industry.
Steady Blockchain Roadmaps
Ever since the UAE government launched the "Smart City Project" in 2013, the government had been consistent with the implementation of its blockchain roadmaps. It consist of three stages which are blockchain 1.0, 2.0, and 3.0, which have to do with different sectors. This was followed by the establishment of the Global Blockchain Committee in Dubai in 2016. This committee consists of 30 members. Then in 2018, it established a Blockchain Court in partnership with Binance exchange. Also, in 2020, the Dubai government and mainstream industries are working tirelessly to ensure that the City becomes the"Blockchain Development Capital of the World." This led to the release of the Dubai Blockchain Strategy 2020.
Possibility of Creation of Central Bank Digital Currency
Irrespective of the position in some quarters that cryptocurrencies should be banned, the UAE government has shown its indifference by stating that it would launch its own Central Bank Digital Currency (CBDC) called Govcoins. This is in pursuit of its 2023 to 2026 strategy to ensure that the Central Bank of the United Arab Emirates (CBUAE) enters into the top 10 central banks in the world. KIKLABB free trade zone in Mina Rashid, Dubai is the first government entity in UAE that accepted cryptocurrencies for obtaining licences and visas in the Dubai Free Zone. In pursuit of this goal, blockchain activities are gearing up in Dubai since different sectors such as finance, tourism, education, and the government will need to adopt blockchain technology to attain the goal.
Increase in the Number of Blockchain Startups
According to Tracxn, there are about 120 blockchain startups in Dubai. This number is expected to rise to about 1000 by the end of the year 2022, according to a publication by Thenationnews. In another development, over 900 applications have been received by the Dubai CV VC agency on blockchain startups that want to receive licenses in Dubai. They are expected to invest at least $125,000 in the economy so as to help the UAE government in achieving its digital goals.
Increase in the Number of Meetups and Dinners
Some cryptocurrency exchanges and blockchain establishments are working to enhance the cryptocurrency history of Dubai by organizing crypto and blockchain get-togethers. For example, in a LinkedIn post, LBank noted that it organizes a crypto dinner once every two weeks so that different players in the industry could meet and discuss on how to enhance the sector.
Zero Tax on Crypto Earnings
Presently, some countries are making laws that would make crypto users, investors, and traders pay heavy taxes on their crypto earnings. This has endangered the growth of Cryptocurrency in those locations. However, Dubai has zero percent tax on personal income for legal residents. This has led to the migration of some cryptocurrency and blockchain companies to Dubai. India's largest cryptocurrency exchange WazirX has plans to relocate due to the 30% tax on cryptocurrency earnings required for Indian cryptocurreny earners.
Conclusion
Blockchain has come to stay and Dubai has shown that it is highly committed to seeing many successes in the industry in the future. Its steady roadmap could attract more investors as there is a migration of both investors and blockchain and cryptocurrency organizations from regions of higher tax returns on crypto earnings to regions with low or no tax. Therefore, it's no wonder that the number of blockchain activities in Dubai is on a steady rise.