The Dubai World Trade Centre Authority and Binance, the world's largest cryptocurrency exchange by trading volumes, signed a preliminary agreement to develop an industry hub for global virtual assets in the emirate, aimed at accelerating their adoption.
The initiative will help expedite Dubai’s plans to establish a new international virtual asset ecosystem, which in turn would generate long-term economic growth using new-age digital innovations, Dubai World Trade Centre said on Tuesday in a statement released by Dubai Media Office.
The development comes a day after the DWTC said it will be setting up a specialised crypto zone, becoming a regulator for virtual assets and cryptocurrencies, including digital assets, products, operators and exchanges, as adoption of such investments picks up pace in the emirate.
“Innovation is a byword for Dubai and this ‘Future-Economy’ environment is designed to catalyse collaboration, stimulate innovation and most importantly assure protection. In line with Dubai’s vision for a fully digital and inclusive society, this world’s first specialist Authority is Dubai’s active response to the industry’s call for support – so that service providers, technology enablers, and governments can co-create the next generation ecosystem for the global virtual asset economy,” said Helal Saeed Al Marri, Director General of the Dubai World Trade Centre.
The move reflects Dubai’s advanced vision for a comprehensive and integrated digital society, he added.
Dubai is accelerating its push towards a more digital-oriented society, with virtual assets a key component of this programme. However, it is ensuring that frameworks, adhering to best international standards, are in place to protect users and businesses, and the integrity and stability of the financial system.
In October, the Dubai Financial Services Authority, the regulator of the Dubai International Financial Centre, unveiled its regulatory framework overseeing digital assets, reflecting the proposed regulations outlined in its consultation paper issued earlier this year.
Earlier this year, the DFSA published its framework to regulate security tokens for public consultation, seeking to address market integrity, financial stability as well as money laundering and terrorism financing threats.
The joint vision of the two parties aims to "support Dubai's efforts to adopt future economic trends, including cryptocurrencies and blockchain technologies", said Changpeng Zhao, chief executive and co-founder of Binance.
He added that cryptocurrency and blockchain technologies are still in their infancy, and that this co-operation takes advantage of Binance's technical capabilities and Dubai's long-term vision to "develop a regulatory framework appropriate to fit the fast-moving and progressive nature of virtual assets".
"The goal is to assist crypto exchanges, businesses that offer blockchain and distributed ledger technology services, and a wide range of digital currencies and assets to become licensed in Dubai," the cryptocurrency exchange said in a separate statement.
UAE regulators last month jointly issued guidelines to help financial institutions safely adopt enabling technologies. They were issued by the Central Bank of the UAE, the Securities and Commodities Authority, the DIFC's DFSA and Abu Dhabi Global Market's Financial Services Regulatory Authority.
The CBUAE does not accept or acknowledge any cryptocurrency in the country, where the dirham remains the only legal tender. However, free zones in Dubai and Abu Dhabi have introduced advanced frameworks to encourage entrepreneurs in the cryptocurrency space to set up exchanges while laying out rules to protect consumers.
In Abu Dhabi, ADGM in November said it already has three operational cryptocurrency exchanges, with three more at various stages of preparation for a soft launch as it looks to expand online asset trading options for investors.
In September, MidChains, an Abu Dhabi virtual asset trading exchange, said it completed its first trades on Bitcoin, Ethereum, Litecoin and Bitcoin Cash. The Mubadala Investment Company-backed exchange, supervised by ADGM, said it is the first such integrated platform in the UAE.
Countries that do not adopt cryptocurrencies sooner would be left behind, Binance's chief executive Changpeng Zhao said at Gitex Global in October, but acknowledged that it will take time before frameworks are fully developed and implemented.
"Regulations cannot be changed overnight, but most regulators are taking the first step, and the channels of communications are really important," Mr Zhao said at the time.
As of Tuesday, the market capitalisation of cryptocurrencies is more than $2.225 trillion, according to CoinMarketCap. Bitcoin, the world's first and most popular cryptocurrency, was trading at $48,735.55, up over 6 per cent in the past 24 hours. It hit a record high on November 9, blowing past $68,000, but has since lost about a third of its value.