The world’s largest cryptocurrency exchange, Binance, secured a virtual asset licence to operate in Dubai.
The company will operate within Dubai’s “test-adapt-scale” virtual asset market model and be “permitted to extend limited exchange products and services to pre-qualified investors and professional financial service providers”, it said in a statement late Wednesday.
Binance will operate as part of the Virtual Asset Regulatory Authority initial regulatory phase, which includes rigorous oversight and mandatory FATF [Financial Action Task Force] compliance controls.
“High standards of regulation and compliance are critical to the development and maturing of the global crypto and blockchain industry … our team has been working tirelessly to demonstrate how we meet and exceed the requirements of regulators such as the Dubai Vara,” said Changpeng Zhao, founder and chief executive of Binance.
It is the second licence for the crypto-asset provider in the GCC. Earlier this week, it won regulatory approval from the Central Bank of Bahrain to operate as a crypto-asset service provider in the kingdom.
The Middle East is one of the fastest-growing crypto markets in the world. It received $271.7 billion worth of cryptocurrency between July 2020 and June 2021, which represents 6.6 per cent of global activity, according to Chainalysis data.
Binance was founded in China in 2017. It has its headquarters in the Cayman Islands and Seychelles, and has faced increased scrutiny from regulators in the US, UK, Europe and China.
The company has taken steps to improve its relationship with the regulators and also sought to expand its presence in the Middle East as it seeks to cash in on the region’s interest in cryptocurrencies.
In December, it signed a preliminary agreement with Dubai World Trade Centre Authority to develop an industry hub for global virtual assets in the emirate.
“Onboarding Binance within the Vara is reflective of their commitment to the Dubai agenda to provide the global industry the certainty of governance, enabled by shared industry responsibility and legislative security for society,” said Helal Al Marri, director general of DWTC Authority.
This month, Dubai adopted the first law in the emirate that regulates virtual assets. Last week, the Dubai Financial Services Authority, the regulator of the emirate’s financial hub, published its regulatory framework overseeing crypto tokens, or cryptocurrencies, for public consultation.
Besides its exchange operations, Binance will start a blockchain technology hub in DWTC to “seed new talent and build a vibrant blockchain ecosystem”, it said.
The UAE government is taking concrete steps to establish a strong digital economy and make use of the advantages provided by digital transformation.
The digital economy contributes about 4.3 per cent to the UAE’s gross domestic product, which is equivalent to Dh100bn ($27.2bn), government figures show.