The Dubai World Trade Centre will become a comprehensive zone and regulator for virtual assets and cryptocurrencies, including digital assets, products, operators and exchanges, as adoption of such investments picks up pace in the emirate.
The authority will also design a comprehensive ecosystem for the sector, Dubai Media Office said on Monday. The move is in line with the government's efforts to create new economic sectors and promote financial inclusion.
DWTC will be co-ordinating with the private sector. It will enforce rigorous standards for investor protection, tackle money laundering and the financing of terrorism and track cross-border transactions in the virtual assets and cryptocurrencies sphere.
"The step continues to accelerate Dubai’s standing as a leading global centre for business, trade and technology. The World Trade Centre will deliver and oversee a new world-class regulatory framework of virtual asset legislative and enforcement policies," authorities said.
It "will be critical to facilitating and broadening cross-border operations and ecosystem innovation to enable safe market adoption and growth for this sector in Dubai".
The DWTC announcement is in line with the UAE's initiatives to help banks and other financial institutions adopt new-age technologies within the sector and manage any risks arising from their introduction.
Investor appetite for digital tokens and cryptocurrencies has been surging in the wake of the Covid-19 pandemic as homebound users look to invest their spare cash. At least half of institutional investors in the UAE surveyed by London-based Nickel Digital Asset Management this year said they plan to dramatically increase their exposure to cryptocurrency assets between now and 2023.
The Central Bank of the UAE does not accept or acknowledge any cryptocurrency in the country, where the dirham remains the nation's only legal tender.
But free zones in Dubai and Abu Dhabi have introduced an advanced framework to encourage entrepreneurs in the crypto space to set up exchanges while laying out rules to protect consumers.
Abu Dhabi Global Market last month said it 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, said the chief executive of its Financial Services Regulatory Authority, Emmanuel Givanakis.
Last month, financial industry regulators and financial free zones in the UAE jointly issued guidelines to help financial institutions safely adopt enabling technologies. They were unveiled by the Central Bank of the UAE, the Securities and Commodities Authority, the Dubai Financial Services Authority of the Dubai International Financial Centre and the FSRA of ADGM.
The adoption of digital financial instruments can also help bridge the digital divide and boost financial inclusion, billionaire blockchain technology pioneer Brock Pierce said recently.
The DWTC is aiming to further develop Dubai virtual assets and markets, including by expanding its framework for innovative financial products, and adopting new trends built on advanced underlying blockchain technology, such as cryptocurrencies and non-fungible tokens.
The global cryptocurrency market continues to maintain its strength, with its market capitalisation at more than $2.14 trillion as of Monday, according to CoinMarketCap.
The international market for NFTs – a type of crypto asset that uses blockchain to record the ownership status of digital objects, with only their buyers having the certified status of being owners – hit $22 billion last week, helped by rising collector craze.