Dubai Attracts Major Crypto Firms With Bespoke Regulations

Crypto firms are rushing to set up shop in Dubai after it began offering virtual asset licensing, making the Gulf state the latest jurisdiction to seek to become a haven for the global crypto industry.

Exchange ByBit, which announced last week that it would be moving its global headquarters from Singapore to Dubai, joins industry majors, FTX and Binance to set up shop in the city.

Enthusiasm for Dubai among crypto firms comes as their hopes for Singapore as a hub for digital assets have faded. While Singapore has only approved a handful of crypto groups that have applied for licenses, Dubai has attracted several industry heavyweights in the few weeks since it launched its licensing program.

Singapore was seen as a budding crypto hub in Asia, after China cracked down on digital assets last year. Now, the crypto caravan has moved on as some companies look to a more responsive regulatory regime in the Gulf.

Changpeng Zhao, chief executive of Binance, who moved from Singapore to Dubai, said the Gulf state government has attracted crypto companies with its “open mindset and business-friendly attitude.”

Binance, the world’s largest crypto exchange by trading volume, has consulted on the rules under which it will now be regulated in Dubai. In December, Binance signed an agreement with the Dubai World Trade Centre, a duty-free business park, to advise on the regulatory landscape for cryptocurrencies in the emirate. The Virtual Asset Regulatory Authority, which launched earlier this month, issued a license to Binance.

Zhao said Binance lobbied for the formation of a bespoke regulator, calling the decision “very excellent” and praising Dubai authorities as “the smartest regulators and government officials in the world.”

However, Dubai’s enthusiastic embrace of virtual assets has raised alarm bells in some financial circles, given the recent decision by the Financial Action Task Force, a global money laundering watchdog, to place the Arab Emirates united on its so-called “grey list” of monitoring procedures to prevent the flow of dirty money.

Lawyers and former regulators in the UK and US have said that a license from the emirate is unlikely to do much to convince Western regulators that crypto exchanges are under proper oversight.

The UK has also been pushing to become a “global hub” for crypto, after City Minister John Glen said in a speech on Monday that the country wants to attract “businesses that don’t have still an established base”. However, the lawyers note that the government will need to urge UK regulators, including the FCA, to be more receptive to crypto operators.

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Dubai’s crypto charm offensive quickly attracted several companies. FTX Europe, the Swiss branch of the exchange, announced in March that it would establish its regional headquarters in Dubai after obtaining a license there. Singapore-headquartered added a Middle East office in the city last week. BitOasis, a Dubai-based crypto exchange also received a provisional license last week.

Binance chose Dubai, where it already has about 200 employees across three offices, to be its regional headquarters, Zhao said. By comparison, he said: “The Singapore government is taking a slightly more cautious approach.”

Binance’s Singapore unit in December dropped its application for a license to run a crypto business in the country after regulators ordered Binance Singapore to stop all crypto transfers with global exchange, which the regulator placed on an investor alert list and said “may be in breach” of local law.

Overall, the Monetary Authority of Singapore (MAS) granted only four crypto licenses, after receiving 176 monitoring requests. More than a hundred companies have been turned away, while around several dozen are still hoping for the green light.

“The very low success rate at MAS discourages the crypto sector in Singapore,” said Chia-Ling Koh, director of law firm Osborne Clarke, which compiled the figures.

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The MAS also instituted a sweeping ban on cryptocurrency advertising earlier this year, which was interpreted as a “strong disincentive by the MAS to offer crypto to consumers,” according to Nizam Ismail, chief executive of the firm. crypto advisory firm Ethikom. “It seemed a bit harsh to me. It was announced and implemented overnight.

In a move ministers said is protecting Singapore from ‘reputational risks’, lawmakers also tightened controls this week by passing new rules that will prevent crypto firms in the city-state from doing business overseas. without license.

Xue Kai Pang, Managing Director of Tokocrypto, a crypto exchange in neighboring Indonesia, said, “Singapore is definitely losing some of its shine and appeal. . . There are more open countries like Dubai.

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Dubai Attracts Major Crypto Firms With Bespoke Regulations

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