The leading cryptocurrency exchanges move to the UAE
The UAE is set to be the world leader in virtual assets with more startups being formed and moving to the country than ever. Abu Dhabi has multiple blockchain and FinTech startups, as does Dubai, which nabbed the biggest cryptocurrency exchange Binance in September of this year. Binance was granted a provisional license in March to operate in Dubai and approval to join the minimal viable product (MVP) program from Dubai’s Virtual Asset Regulatory Authority (VARA) in September. Earlier in April, Abu Dhabi Global Market (ADGM) granted Binance approval to operate as a broker-dealer in virtual assets in the UAE capital, Abu Dhabi. In addition to Binance, Crypto.com, FTX, and Kraken were also granted approval under Abu Dhabi’s ADGM and Dubai’s VARA.
What are virtual assets?
A virtual asset is a non-physical entity that typically exist on a digital ledger and is can also be used to represent a real asset. Virtual assets can be bought, sold, or traded on exchanges just like traditional stocks and bonds.
Virtual assets are created through a process called tokenization, which converts an existing asset into a digital token that can be stored on a blockchain. Tokenization allows for the fractional ownership of an asset, which opens up new investment opportunities for individuals and institutions.
The most well-known virtual asset is the cryptocurrency, which uses blockchain technology to track transactions. Cryptocurrencies are not backed by any government or central bank, and their value is derived from supply and demand on exchanges. Bitcoin, the first and most popular cryptocurrency, was launched in 2009. Since then, thousands of other cryptocurrencies have been created with various features and purposes.
Virtual gaining traction
In the past decade, virtual assets have become more popular and their use has grown exponentially. Today, there are thousands of different types of virtual assets in existence with a total market value of over $1 trillion. Virtual assets are gaining traction for a variety of reasons.
One reason virtual assets are becoming more popular is because they’re easy to trade. Unlike physical assets, which can be difficult to transport and store, virtual assets can be easily traded online. In addition to their ease of trade, virtual asset markets are ooen 24/7. This makes them much more accessible to a wider range of investors and people without access to traditional banking systems.
UAE has an early start
Virtual Asset Regulatory Authority of Dubai has granted a license to a number of businesses since the creation of the crypto rules and related laws in March of 2022. And as early as 2018, ADGM, the International Financial Center in Abu Dhabi, launched its framework to regulate spot crypto asset activities.
MENA region the fastest-growing cryptocurrency market in the world
Despite many talking about the “crypto winter”, cryptocurrency is here to stay, says Zhao Changpeng, founder and chief executive of Binance.
According to a report by Chainalysis, the MENA region is the fastest-growing cryptocurrency market in the world, accounting for 9.2% of global virtual currency transactions from July 2021 to June 2022.
Investors in the MENA region received $566 billion in virtual currencies during the period - an annual increase of 48%, Chainalysis said in its 2022 Global Crypto Adoption Index, which was dominated by emerging markets like those in the MENA region. The UAE recorded $38B in cryptocurrency activity in the time frame, compared with $28B in the previous year, the index findings showed. Further strengthening these figures, Binance recently announced it has seen an incredible 49% rise in new users in the MENA region this year.
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