What are the Global Crypto Hubs? Investment monitor

London and Dubai are the cities most likely to attract future investment and become hubs for crypto-related startups, according to a study by crypto tax calculator Recap. The company examined a number of data points, including research and development as a percentage of GDP, crypto ownership, crypto-specific events, capital gains tax rate and the number of crypto companies in a location. The results, announced in January 2023, placed London and Dubai in first and second place respectively.

Throughout 2022, the governments of both the United Kingdom and the United Arab Emirates (UAE) lent public support to their crypto communities and announced ambitions to become global crypto capitals.

London’s crypto embrace

As crypto markets plunged in March 2022, signaling the start of a so-called ‘crypto winter’, former British Chancellor of the Exchequer (and now Prime Minister) Rishi Sunak announced in April 2022 plans to make the UK a “global hub for crypto-asset technology and investment” to ensure the UK’s continued global competitiveness in the nascent sector. The timing was questionable, but as Chancellor of the Exchequer, Sunak was a vocal proponent of cryptocurrency and blockchain technology. As the UK’s current Prime Minister, many in the crypto community count on Sunak’s continued support and commitment to Britain’s financial digital future. So far, nothing has signaled a reversal on Sunak’s part.

Singapore-based crypto exchange Bitrue operates mostly in Europe with a user base of more than 15,000 in the UK. Bitrue chief strategy officer Robert Quartly-Janeiro argues that London has some unique advantages as a crypto-ready location; above all, the UK government’s willingness to embrace the sector. “What is important is that the UK Government uses London’s position to build a well-respected and professional industry that creates new jobs – and through it gives a significant boost to economic development,” he adds.

In addition, Quartly-Janeiro cites London’s crypto ecosystem’s large number of alternative investment and asset management companies as a major advantage, as well as the UK’s continued rise in crypto investment in general.

Dubai established as global crypto hub

Similarly, politicians in Dubai have led the charge to position the emirate as a global crypto hub. Mohammed AlKaff AlHashmi, co-founder of the Sharia-compliant Islamic Coin, the native currency of the Haqq community-driven blockchain, says there are more accumulating crypto investments in Dubai than any other crypto hub in the world. “There is a huge infrastructure here around telecommunications, the internet and the urban environment,” he adds. “By investing in human capital, [investors] also invests in the ecosystem which in turn attracts the creative minds to the emirate.”

In June 2022, Islamic Coin was subject to a fatwa, issued by the world’s leading Muslim authorities. The intersection of cryptocurrency and Sharia compliance has long been a sticking point, but two months after the fatwa was issued, Islamic Coin went on to raise $200 million (Dh734.62 million) in a private sale. The controversy has not dampened Dubai’s ambitions to become a global crypto hub.

Institutional support in Dubai is significant. AlHashmi credits “visionaries” in the establishment who help develop advanced technology initiatives that originated in Dubai. “First of all, you won’t find any other country that has a government ministry for the future or artificial intelligence,” says AlHashmi. “The UAE has also started a space agency, and Dubai has the first Virtual Assets Regulatory Authority for the development of the digital economy.”

In 2022, Dubai attracted cryptocurrency companies, including the world’s leading trading platform, Binance, and crypto exchange Bybit, which moved its headquarters from Singapore to Dubai. An influx of investment from foreign crypto companies is seen by many as a direct result of the emirate’s forward-looking stance on regulatory clarity for the sector. In February 2022, Dubai authorities announced a new set of digital asset regulations, which were seen as a trigger for foreign investment.

In addition to players in the crypto industry, AlHashmi says that many crypto start-ups are launched from Dubai because it is seen as a major global hub with geographical access to East and West. “There are many events happening here every day that take the industry to the next level, attracting the brightest minds in the Web3 industry,” he adds.

London and Dubai seem to be holding steady through the crypto winter and playing a long game. Despite crypto’s reputational problems following the collapse of trading platform FTX and the ensuing bear market, GlobalData research predicts that far from being dead, crypto’s current woes may simply outlaw a culling of unrealistic use cases. When the spurts of economic growth finally reveal themselves, both cities will be well positioned to cement their global leadership of the sector.