Why is Dubai the most suitable headquarters for cryptocurrency companies?

Recently, billions of dollars have been spent on crypto-digital products in the 3-character market, NFT.

It is short for immutable tokens or non-exchangeable crypto-tokens that use cryptocurrencies to buy and sell. Many NFT symbols come in the form of images, videos or audio materials under the name “digital art”.

The most famous of these transactions is what happened last December, by American rapper Eminem, who bought a picture of a monkey named EminApe for about $ 452,000. But Eminem did not pay dollars in dollars but on the air.

Here’s the link for the horse, as NFT transactions have to be conducted in encrypted currencies, which gave cryptocurrencies an important thing they lacked in addition to value and scarcity, which is a specialized liquidity market.

Here, the UAE enters the scene.

Fashion and wealth

The Dubai World Trade Center recently announced that it is working to build a legislative and regulatory system for digital assets, including the statutory framework for fixed assets or NFTs.

Mukhtar Khurshid, the founder of Forgotten Mines, which is developing a Washington-based cryptocurrency trading platform, likened the growing demand for NFT to the “tulip craze” that is an economic bubble in the Netherlands when demand for the modern tulip flower increased at the time, until its price skyrocketed starting in 1634 before collapsing in the following years.

Celebrities are not only buying NFT, but also launching their own parts, like Argentine footballer Lionel Messi, who launched several NFT products that commemorate historic moments in his career. And it reached sales of $ 3.4 million on the first day it went up for sale last August.

The UAE is known as the country that embraces everything new, as the capital of fashion, technology and real estate, when you want to do something, do not do something ordinary or traditional, but it has to be the “biggest” or ” the first “or often both. This is exactly what cryptocurrency companies need to grow and thrive.

More companies

Last December, the Binance cryptocurrency exchange, the world’s largest in terms of trading volume, announced that it had signed a memorandum of understanding with the World Trade Center in Dubai to accelerate preparations for a new hub for global virtual assets.

The cryptocurrency exchanger Rain O Rain, the first crypto-asset platform to receive a license in the region from the Central Bank of Bahrain, announced this week that it has received initial approval for an authorization to provide financial services from the Abu Dhabi Market.

The trading volume on the Rain platform during the first half of last year exceeded one billion dollars.

In Dubai, BitOasis, the largest cryptocurrency exchange in the region, reached a trading volume of more than $ 3 billion over the same period.

“When you think of the Gulf, you feel that the NFT is done … of course, Binance knows what’s in it,” according to Khorshid.

New York-based analytics firm blockchain Chainalysis estimates that cryptocurrencies invested in NFT-linked Ethereum smart contracts totaled $ 41 billion last year, which is close to Egypt’s foreign exchange reserves.

And smart contracts record transactions using blockchain technology that maintains the confidentiality and accuracy of data, which is paid only in digital currencies. Ethereum contracts use ether, the second most popular cryptocurrency after bitcoin.

Khorshid says the NFT revival necessarily gives a boost to cryptocurrencies, especially ether, because with every purchase, digital currencies are paid for in exchange for the smart contracts that record purchases.

Tel Aviv

The Israeli capital comes here as a legitimate question that many ask: Why is the UAE and not Israel pulling cryptocurrency companies?

Tel Aviv is presented as a potential hub for cryptocurrencies in the region and the world as Israel is the only developed economy in the region, however, like the United States, it does not fully welcome cryptocurrency transactions.

The Central Bank of Israel announced in 2018 that it does not recognize cryptocurrencies as official currencies, but treats them as financial assets. Israeli banks have sometimes been reluctant to conduct transactions involving cryptocurrency-related activities.

Central Bank of Israel officials have repeatedly expressed concerns about cryptocurrencies. Deputy Governor of the Central Bank of Israel Andrew Abeer described Bitcoin as a “pyramid scheme”.

But whatever the fate of cryptocurrencies, it is clear that there is a possibility and the UAE is seeing it.

The article is the second in a series of articles analyzing the situation of cryptocurrencies in the region and why the UAE seems to be the destination for them.

To read the first part: Dubai: Will it become the cryptocurrency capital?

(Prepared by: Sheriff Tarek, Sheriff works with Ahram Online and Africa Report, is also the editor-in-chief of Delta Digest and has previously worked for other media organizations, including the Los Angeles Times)

(Editing: Yasmine Saleh, contact: yasmine.saleh@lseg.com)

© ZAWYA 2022

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