Over the past few years, Bitcoin has evolved from being the original cryptocurrency used primarily as a means of speculation into what is now seen as a revolutionary product that is changing the nature of finance and transactions. What is less understood is the greater significance of the underlying blockchain technology on which Bitcoin is built.
A technology whose benefits are being leveraged to enhance supply chains, financial services, healthcare records, government services and countless other business processes. These substantial benefits revolve around an economic way to validate data and transactions in a fast, transparent, secure and traceable manner.
A culture of open-mindedness and a willingness to diversify have always resulted in the UAE being at the forefront of embracing and deploying groundbreaking technology. This is clearly demonstrated by the Dubai Blockchain Strategy, a shared collaboration between the Smart Dubai Office and the Dubai Future Foundation.
Coupled with the Emirates Blockchain Strategy 2021, these initiatives aim to transform 50 per cent of all government transactions onto blockchain ledgers by next year. Such a process would not only streamline government services by improving economic efficiency and speed, but also enhance security and reduce margins of error, while being more eco-friendly at the same time.
The UAE’s ambitions to embrace blockchain are not limited to enhancement of government services. With more than 100 million global blockchain wallets holding approximately $400 billion in liquid assets, the UAE has long sought to attract this niche segment into its economy.
One such way has been Dubai’s annual hosting of the World Blockchain Summit, which has enjoyed great support and been met with huge enthusiasm over the past few years. Besides drawing substantial foreign wealth into the UAE, this summit has also served as a platform to encourage collaboration and entrepreneurship, with some promising developments being generated as a result.
In short, the country has not only embraced blockchain technology but also actively made efforts to empower and enhance blockchain startups, either via government-endorsed accelerators or subsidies.
One of the strongest advantages that the UAE maintains in this field is the clarity of its regulation on digital assets. While much of the world is still unsure about how to treat cryptocurrencies and digital assets, the Security and Commodities Authority had already issued a draft regulation as early as September 2019. The board of directors, led by Abdulla Bin Touq, UAE Minister of Economy approved this as legislation in October 2020, providing a clear framework and raising the confidence of companies and individuals that are operating in this space.
Local entrepreneurs investing into digital transformation have benefitted from such policies and support. Consider MidChains, a global institutional blockchain-enabled exchange founded in Abu Dhabi. Seeking to launch later this year, MidChains will join what is only a handful of fully regulated exchanges operating around the world.
This was facilitated by the clear regulatory framework offered by the Financial Services Regulatory Authority. Coupled with significant funding from Mubadala and the Abu Dhabi Investment Office, as well as Miami International Holdings, this is just one example demonstrating the high level of potential for such ventures in the UAE.
Looking towards 2021, the drive to ensure that the UAE remains at the forefront of global digital transformation appears stronger than ever. With government support, easy access to funding and a public willing to adapt to change, it has become increasingly realistic to expect the creation of different blockchain ecosystems in the UAE in coming years.
This environment provides constructive support for groundbreaking digital innovation, which is only likely to grow in strength. For this reason, it is easy to understand why the UAE will remain a leader in the global race for constructive digital disruption.
Mohammed Altajir is the founder and project custodian of Tratok Portal.