A sense of “greater regulatory clarity” is the reason for the influx of cryptocurrency businesses in Dubai and Abu Dhabi, according to Citi.
The Middle East is one of the fastest-growing cryptocurrency markets in the world, making up 7% of global trading volumes, according to Chainalysis.
U.S. cryptocurrency exchange Kraken is expanding into the Middle East and will open its regional headquarters in Abu Dhabi after receiving a full license to operate a regulated trading platform in the UAE.
“We’re incredibly excited to be able to set up our operations right in the ADGM [Abu Dhabi Global Market] itself to operate a virtual asset platform that finally offers Dirham pairs for investors in the region,” Curtis Ting, Kraken’s managing director for Europe, the Middle East and Africa, told CNBC’s Dan Murphy.
Kraken will become the first cryptocurrency exchange to offer direct funding and trading in UAE dirhams against bitcoin, ether and a range of other virtual assets, after gaining regulatory approval from the ADGM and Financial Services Regulatory Authority for its local launch.
“For us, it’s really important to facilitate access to global markets and global liquidity by making sure that investors and traders in the region have access to local currencies,” Ting said.
Kraken, which launched in 2011 and operates in over 60 countries, said the UAE launch marks a wider play into an increasingly lucrative region. The Middle East is one of the fastest-growing cryptocurrency markets in the world, making up 7% of global trading volumes, according to Chainalysis.
The UAE transacts approximately $25 billion worth of cryptocurrency each year. It ranks third by volume in the region, behind Lebanon (about $26 billion) and Turkey ($132.4 billion), according to Chainalysis data studied between July 2020 and June 2021.
“One of the reasons we see an influx of entrepreneurs, builders, operators and developers coming into Abu Dhabi and Dubai … is because there is a sense of greater regulatory clarity at ADGM, in Dubai, and at a federal level,” Ronit Ghose, global head of banks research at Citi, told CNBC’s “Capital Connection” on Thursday.
“It’s frankly amazing some of the talent the UAE has attracted in the last 12 to 24 months during COVID,” Ghose said. “Is it really beginning to establish itself as both a crypto hub and a Web3 hub.”