Abu Dhabi has launched a new association backed by the emirate's financial free zone to hasten the development of blockchain and cryptocurrencies in the region.
The Middle East, Africa and Asia Crypto and Blockchain Association (MEAACBA), a non-profit organisation backed by Abu Dhabi Global Market, aims to bring industry players together to discuss strategies and address the biggest challenges facing the industry, while also integrating digital assets into key economic sectors.
The ADGM-based association counts major cryptocurrency platforms such as Mubadala-backed MidChains, Dubai-based BitOasis, Bahrain's Rain Financial, Crypto.com and Binance, the world's biggest cryptocurrency exchange by trading volume, among its partners.
“The UAE is heading to become one of the best international financial centres, and we want to be a recognised contributor to the development of the diversified and sustained development of the UAE economy,” ADGM chairman Ahmed Al Zaabi said during a speech at the launch event in Abu Dhabi on Tuesday.
“We strongly believe that MEAACBA will constantly contribute towards the bolstering of the UAE’s digital economy and adoption … and will have an impact in the region and globally.”
The move positions Abu Dhabi and the UAE at the forefront of innovation, in line with government objectives to capitalise on the continuing digital transformation to transition into a knowledge-based and smart economy.
Blockchain is the underlying technology behind cryptocurrencies and decentralised finance, which is generally considered to be a safer way to conduct transactions and one that could end up replacing middlemen, such as brokers and banks, in the financial system.
The UAE has taken several steps to integrate blockchain into the economy, government and society as part of efforts to develop the future economy.
Blockchain, in particular, has received special focus, with a number of government initiatives established, including the Emirates Blockchain Strategy 2021 and the Dubai Blockchain Strategy, as well as the formation of the Global Blockchain Council.
The UAE is "very well-placed" to build the industry's next phase of growth, Stuart Isted, general manager for the Middle East and Africa at Crypto.com, told The National.
"If you look at the US and UK market, they don’t have the same regulatory framework and intent from the regulator to build out an industry from the ground up, which is what the UAE has done," Mr Isted said.
Last year, ADGM revealed its plans to double the number of its cryptocurrency exchanges to expand online asset trading options for investors.
The UAE digital economy contributes 4.3 per cent to the national economy, according to government data.
The Emirates has also been moving up the ranks as a recognised global cryptocurrency centre. It is now among the top five nations in terms of adoption, with annual transactions worth $25 billion, according to consultancy PwC.
Meanwhile, the wider Mena region is the fastest-growing cryptocurrency market in the world, accounting for 9.2 per cent of global digital currency transactions from July 2021 to June 2022, according to blockchain data platform Chainalysis.
The global blockchain market is also booming and projected to grow to $7.18bn this year and $164bn by 2029 at a compound annual rate of more than 56 per cent, from about $4.7bn in 2021, according to Fortune Business Insights.
The capital is also set to host the first Middle East Blockchain Awards at this month’s Abu Dhabi Finance Week.
The new association is keen to address the cryptocurrency sector's challenges, especially now that it is going through what is called a “crypto winter”, or a cool-down in the market that dragged Bitcoin to below its key $20,000 psychological level in June and wiped $2 trillion off the sector’s total market, sending it below $1 trillion.
Bitcoin, the world's first and biggest cryptocurrency, was trading at about 5 per cent lower at $19,773.73 at 2pm UAE time on Tuesday, according to Coinbase.
“We have had some very nice springs and summers, but also pretty cold and chilly winters,” said Jehanzeb Awan, chairman of the new association and founding partner and chief executive of Dubai-based financial consultancy J Awan & Partners.
“Businesses are built on principles, not seasons, therefore, we need a lot of effort to bring all industry players together.”
"A lot of people focus on the speculative nature of the industry, but this year is a chance to focus on the fundamentals of the industry," Joseph Dallago, chief executive and co-founder of Rain Financial, told The National.
The association's goals include developing educational campaigns and co-ordinating with local and global partners to draw up frameworks for blockchain ecosystems that are accessible, transparent and comply with industry standards.
MEAACBA's strategy will help advance financial inclusivity, in co-operation with local authorities, as regulation will be the "largest gate" for mainstream adoption, said Basil Al Askari, co-founder and chief executive of MidChains.
"This will help inform, and ultimately, adoption or at least acceptance, for banks to work with virtual assets that are regulated, and in turn to work with their clients," he told The National.
The association will also address the issue of sustainability in the cryptocurrency sector, which has faced a backlash for its massive energy consumption.
Operating on systems that are environmentally responsible will "make people more comfortable" in involving themselves with cryptocurrencies, said Dominic Longman, a senior executive at Binance.
MEAACBA will also hold competitions to find companies to develop solutions for real economy problems. The winners will be given an opportunity to receive industry support and connect with investors.