Dubai is luring the clutch of big crypto firms with bespoke regulations

Crypto firms are rushing to set up shop in Dubai after it started offering virtual asset licenses, making the Gulf state the latest jurisdiction trying 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 major industry players, FTX and Binance to gain a foothold in the city.

The enthusiasm for Dubai among crypto companies comes as their hopes of 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 its licensing program launched.

Singapore had been viewed as one emerging crypto hub in Asia, after China cracked down on digital assets last year. Now the crypto caravan has moved on as some companies target a more accommodating regulatory regime in the Gulf.

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

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

Zhao said Binance has championed the formation of a bespoke regulator, describing the decision as “very excellent” and praising the Dubai authorities as “the smartest regulators and government officials anywhere in the world.”

However, Dubai’s enthusiastic adoption of virtual assets has raised alarms in some financial circles amid the recent decision by the Financial Action Task Force, a global money laundering regulator, to place the United Arab Emirates on its so-called “grey list” of expanded currency monitoring procedures to prevent of the river of dirty money.

Lawyers from the UK and US, as well as former regulators, said a license from the emirate is likely to do little to convince Western regulators that crypto exchanges are under proper oversight.

Great Britain has also submitted a proposal become a “global hub” for crypto, after City Secretary John Glen said in a speech on Monday that the country wants to attract “firms that don’t yet have a branch”. However, lawyers point out that the government needs to get UK regulators, including the FCA, to be more open-minded towards crypto operators.

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Dubai’s crypto charm offensive has quickly attracted multiple companies. FTX Europe, the exchange’s Switzerland-based arm, said in March it would set up a regional headquarters in Dubai after receiving a license there. Headquartered in Singapore, opened a Middle East office in the city last week. BitOasis, a Dubai-based crypto exchange, also received a provisional license last week.

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

Binance’s Singapore unit in December dropped his application for a license to operate a crypto business in the country after regulators ordered Binance Singapore to halt all crypto transfers with global exchange, which the regulator placed on an investor warning list and said it “might violates local laws”.

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

“The very low MAS success rate is discouraging the crypto sector in Singapore,” said Chia-Ling Koh, director of law firm Osborne Clarke, who compiled the numbers.

Also at the beginning of this year, the MAS a blanket advertising ban for cryptocurrencies, which according to Nizam Ismail, chief executive of crypto consultancy Ethikom, has been interpreted as “a strong discouragement by the MAS for offering crypto to consumers.” “That seemed a bit harsh to me. It was announced and implemented overnight.”

Lawmakers also tightened controls in a move ministers said would protect Singapore from “reputational risks.” in this week by enacting new rules preventing crypto companies in the city-state from doing business abroad without a license.

Xue Kai Pang, CEO of Tokocrypto, a crypto exchange in nearby Indonesia, said, “Singapore is definitely losing some of its glamor and appeal. . . There are more open countries like Dubai.”

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Adam Bradshaw

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