About 67 per cent of UAE residents are interested in investing in cryptocurrencies within the next five years, according to a new survey, as the country takes steps to further regulate the digital assets industry.
One in five consumers in the UAE (21 per cent) also said they intend to trade in cryptocurrencies in the next 12 months, the highest globally after Indonesia (25 per cent) and India (22 per cent), the survey by market research company YouGov, which polled 20,000 respondents in 18 markets from December 15 to 30 last year, found.
Trust in cryptocurrencies among consumers in the Emirates is also the highest globally, along with India, at about 40 per cent.
In comparison, consumers in western markets are not too convinced by digital tokens.
Only 6 per cent of people in the UK, 9 per cent in France, and 11 per cent in Italy said they trust cryptocurrencies, where laws governing virtual assets have not yet been defined, YouGov said on Wednesday.
Adults aged 25 to 34 years, who accounted for 74 per cent of those polled in the UAE, are most interested in cryptocurrencies compared with users aged 45 or older, the survey added.
“The financial services industry has been undergoing rapid transformation, driven by both changing consumer expectations and wider industry fragmentation,” Emma McInnes, global sector head of financial services at YouGov, said.
“In the digital age of finance, the concept of money is continuously evolving. This has led to the creation of new financial assets like cryptocurrencies, which were once considered niche and short-lived, but now are becoming more mainstream.”
Dubai adopted a law to regulate virtual assets this month. The Dubai Virtual Asset Regulation Law is aimed at creating an advanced legal framework to protect investors and provide international standards for virtual asset industry governance that will promote responsible business growth in the emirate.
The Dubai Virtual Asset Regulatory Authority (VARA), which will be established under the new law, will regulate the sector throughout the emirate, including all special development zones and free zones except the Dubai International Financial Centre (DIFC).
Cryptocurrency exchange Bybit, which has more than two million registered users, also said on Monday it received approval to conduct virtual assets business in Dubai and plans to set up its global headquarters in the emirate.
Singapore-based cryptocurrency exchange crypto.com also said it will establish its regional hub in Dubai.
BitOasis also announced on Wednesday that it has received provisional approval from VARA to continue its business operations in Dubai while it undertakes the process of applying for a licence.
The proposed regulations are intended to protect investors and apply to companies interested in marketing, issuing, trading or creating crypto tokens in or from the DIFC, the DFSA said in the consultation paper.
Central banks around the world have been reluctant to endorse cryptocurrencies because of their high volatility, speculative nature, lack of value and regulatory oversight. The Central Bank of the UAE also does not recognise cryptocurrencies as legal tender.
“Although the popularity of digital currencies is growing worldwide, there are serious concerns about security and fraud,” Ms McInnes said.
“Building trust among consumers is pivotal for this emerging asset class to accelerate adoption. Countries like the UAE have already created governing bodies to measure and promote the growth of virtual assets, and by doing so, it’s keeping itself ahead of most of the world in terms of developing the crypto market.”
The YouGov survey found that 51 per cent of those in the UAE who intend to invest in cryptocurrencies in the next 12 months said hacker risk was their biggest concern.
Other user concerns include not being able to access money without an internet connection, identity theft, not being able to easily speak to a person for troubleshooting, lesser fraud protection and inadequate government regulation, the research revealed.