While regulators in the US, UK and Europe have been dragging their feet on crypto, Abu Dhabi has been quietly throwing in some business.
The emirate brought in its regulatory framework in 2018 – years ago in the crypto era – and it has worked a treat, with Binance, Kraken and others recently establishing themselves there.
They look set to be joined by Standard Chartered’s crypto firm Zodia Markets, Financial news revealed this morning.
The exchange, which is aimed at institutional players, has already prepared an application to operate in Abu Dhabi, and plans to submit a new one early next year after extended talks with regulators.
Abu Dhabi has turned to crypto – and financial innovation more broadly – in an effort to reshape its economy and reduce its reliance on oil and gas. That has meant setting the bar relatively low for firms to set up shop: the Financial Action Task Force recently said the UAE was not doing enough to counter money laundering risks, something that has proved a stumbling block in other countries such as e.g. like the UK.
The UAE is now the fifth largest crypto market in the Middle East behind Turkey, Lebanon, Saudi Arabia and Egypt, with a transaction volume of around $28 billion, according to data from July 2021 to June 2022 compiled by Chainalysis.
Zodia Markets, meanwhile, is part of a crypto double act set up by StanChart, which also launched Zodia Custody last year. Zodia Markets is a partnership between SC Ventures, the innovation and venture arm of StanChart, and BC Technology Group, a Hong Kong-based crypto firm.
In an interview with United NationsZodia Markets CEO Usman Ahmad praised Abu Dhabi for being “forward-looking in terms of getting the regulations in place”.
It probably doesn’t hurt that these regulations are very crypto-friendly, of course…
The best of the rest
Binance CEO Changpeng ‘CZ’ Zhao said the crypto giant would sell its holdings of rival FTX’s token, FTT, after Coindesk reported that FTX CEO Sam Bankman-Fried’s other crypto firm Alameda relied heavily on the token for its balance sheet. It has led to wider repercussions in the market and a Twitter spat between the two powerful bosses.
Fidelity announced on November 3 that it would allow individual investors to buy, sell and hold bitcoin and ether through Fidelity Crypto, a brokerage service that brings crypto and traditional investments into one place. Investors will be able to invest as little as $1 and trading will be fee-free.
Crypto firms are stepping up US political donations ahead of the midterm elections, in an attempt to influence the current gridlock over regulation of the sector. FTX leaders alone have given nearly $70 million to candidates of both parties during this election cycle, according to campaign-tracking nonprofit OpenSecrets.
Law enforcement officials in the United States said they seized nearly $3.4 billion in bitcoin from a real estate developer defrauding Silk Road, the dark web marketplace, in 2012. The crypto seizure, the Justice Department’s second largest ever, took place in 2021 at the home of James Zhong, a 32 years old computer science graduate. Zhong was arrested and pleaded guilty to wire fraud on November 3.
Time for a trade
Nomura is building a 50-strong team for its crypto spin-out, Laser Digital, and aims to start trading digital assets early next year.
Laser Digital’s first line of business is a venture capital investment division, which will target the digital assets sector. Nomura is now hiring expertise and building an electronic trading platform to launch by April next year, executives said United Nations. The new company aims to have around 50 employees by March 2023.
“We’ve been kind of lucky to have built this in a crypto winter. It gives us the opportunity to find talent that’s more accessible and at a more reasonable price,” said Steven Ashley, Nomura’s former head of wholesale banking, now chairman of Laser Digital.
“There was some craziness that happened in the first few months of 2022, but we’re looking longer and it’s better to build out the business in the current climate.”
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