Use of digital currencies to increase in UAE as regulations come in place
A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration.Image Credit: Reuters
Abu Dhabi: Digital Assets Exchange (DEX), which recently secured approval from the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market to operate a crypto asset exchange, expects the use of crypto currencies to increase in the UAE as authorities put in place regulations to boost the growth of digital assets.
“We would see the use of crypto and digital assets to increase in the UAE, particularly within the institutional or qualified investor sector as the crypto asset system becomes highly regulated,” said CEO and Founder of DEX Leon Smith speaking to Gulf News.
“This would allow banks and other institutional investors’ participation in a market that was previously unregulated and is now moving towards a highly regulated place and this allows market entry for a lot of the institutional stakeholders in the UAE as well as GCC market as a whole.”
ADGM last year launched the region’s first comprehensive crypto asset regulatory framework to regulate entities operating crypto asset businesses, including activities undertaken by crypto asset exchanges and risks relating to money laundering and financial crime and consumer protection, among others.
The UAE also plans to launch initial coin offerings (ICO)s in the first half of 2019 to allow companies to issue crypto tokens instead of shares. The move is expected to boost capital markets, according to Obaid Al Zaabi, chief executive officer of the Securities and Commodities Authority (SCA).
“We are going to have regulations on the ground in the first half of 2019. This is the first time in the GCC and we will be the pioneers in this. We are working with consultants and international law firms on this,” Al Zaabi said.
The central banks of the UAE and Saudi Arabia are also working towards the launch of a common digital currency called “Aber”, which will be used in financial settlements between the two countries through Blockchains and Distributed Ledgers technologies.
Through this digital currency, both the Saudi Arabian Monetary Authority (SAMA) and the United Arab Emirates Central Bank are studying the impact on the improvement and reduction of remittance costs and the assessments of risks.
Smith says the adoption of technology by the UAE Central Bank and Saudi central bank is positive and will boost adoption of blockchain technology across the GCC (Gulf Cooperation Council).
“We are really excited about the growth of crypto and digital assets both in the retail and institutional markets. We are going to be a crypto asset exchange and crypto asset custodian serving both the retail and institutional market.”
The comments come as the value of digital currencies like bitcoin soars in recent times on growing optimism over the adoption of cryptocurrencies after Facebook unveiled its Libra digital coin recently. Bitcoin traded as high as $14,000 last month.
In short term, DEX is planning to expand in the GCC markets subject to regulatory approvals from the concerned authorities, Smith added.
Source: Gulf News