Insights from Dubai’s cryptocurrency scene as a city that appears to be a global hub for digital assets

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

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 were just at the Dubai Fintech Summit. What topics were discussed there?

Ghassan Jumblat: The UAE has been working on creating a regulatory framework for cryptocurrency and the blockchain. In 2019, the United Arab Emirates launched the Emirates Blockchain Strategy 2021, which plans to have 50% of public transactions conducted on blockchain. We also have the Dubai Multi Commodities Centre. It launched its own cryptocurrency in 2021. DMCC also launched DigitalSugar, a blockchain-based platform that enables the trading of sugar on a digital platform.

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

Chess: It is Dubai’s VARA [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 an exchange perspective?

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

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

Chess: How might Dubai’s strategic location position it as a leading hub or at least an important center for digital assets in the future?

Jumbled: In March 2022, the Dubai Law regulating virtual assets entered into force. The Act established VARA as a regulatory agency and empowered VARA to make appropriate laws and regulations. VARA also defines virtual assets. They identified services that require licenses. I can see that Dubai is a global hub for digital assets. They do it responsibly.

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

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

Chess: There are bad actors too. FTX also received a VARA license. Are the authorities now in the process of closing any loopholes in the concession laws?

Jumbled: There are definitely bad actors, and VARA and other regulators are trying their best to educate people. Public education is very important.

And when it comes to using digital assets, you need to engage teenagers. I’ll give you an example. Last Christmas my wife asked my son what he wanted for Christmas and he said assets on the popular Fortnite online game. It took my wife two to three days to understand the idea of ​​buying him something that she can’t touch.

Industries such as games, fashion and music can help teenagers understand what digital assets are and make it widely accepted. Of course, caution and due diligence should be done when sharing financial or other information.

Chess: Tell us about Digital Dirham or UAE’s CBDC. Do you think it will come out soon? What use cases do you expect to come out of Digital Dirham?

Jumbled: The latest plan is to unveil the digital dirham by mid 2024. One thing we need to know about the digital dirham, it is backed by the government. So from my side it is risk-free. It is issued and guaranteed by the central bank and functions as a secure, cost-effective and efficient payment.

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

Digital Dirham will be available for most domestic payments, supermarkets, schools, restaurants, everything in the mall. In the case of cross-border payments or online shopping outside the UAE, some kind of contract with other countries or with other major retailers such as Amazon, Google Pay or Microsoft will be required to use Digital Dirham.

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

Chess: The US is cracking down on crypto and most exchanges are looking at friendlier jurisdictions. Do you think the UAE will favor local exchanges or will it allow foreign competition to enter?

Jumbled: The UAE is built on not being a closed environment, so it definitely encourages competition. Like Binance, it has been there from day one.
Local competition is also encouraged, as well as support for blockchain and cryptocurrency startups. Locals are more likely to use local exchanges in Dubai. People who come to work in Dubai and their job involves moving around regions, they may favor international exchanges.