OKX, one of the largest crypto exchanges in the world, has launched a platform for institutional and retail investors in the UAE, as the market is experiencing a bullish trend.
The exchange is optimistic that stablecoins will help bridge crucial financial service gaps in emerging markets such as the Emirates, its president Hong Fang said. Stablecoins are a type of cryptocurrency pegged to a fiat currency and tend to be less volatile unlike Bitcoin, where wild swings are influenced by simple factors such as tweets.
Seychelles-based OKX expects clear and robust regulations, such as those announced by the UAE, to create "positive results and a thriving ecosystem" for the nearly $173 billion industry, Ms Hong told The National.
The UAE Central Bank's latest regulations on stablecoins announced in June are expected to enable a clear operational framework for cryptocurrencies when they take effect in 2025, ushering in the mainstream acceptance of decentralised currencies within the country.
The rules will only allow businesses and vendors in the Emirates to accept cryptocurrencies for goods and services if they are dirham-backed stablecoins.
"I'm very keen to see how stablecoins will drive the next wave of adoption, particularly in emerging markets where there's a need for better payment [methods], particularly in cross-border [applications] like remittances and whether there's foreign exchange replacement opportunity," Ms Hong said.
"That can be an interesting opportunity to observe. From a business perspective, as a platform we try to offer whatever the customer needs, but at the same time we also have product initiatives that we want to continue to build and and stablecoins are one part of that consideration."
OKX's UAE platform will provide spot, derivatives and fiat services, including US dollar and dirham deposits, withdrawals and spot-pairs to institutional and qualified retail customers.
The company said it offers the "widest selection" of cryptocurrencies and trading pairs in the UAE, with more than 280 cryptocurrencies and 480 trading pairs, including with Bitcoin, Ethereum and USDT. It also supports 46 fiat currencies.
Ms Hong was joined at the event by OKX chief executive Star Xu and Pep Guardiola, the manager of English football club Manchester City, which has OKX as its official cryptocurrency partner.
Mr Guardiola expects "further advancements in this space" as part of commitments to "innovation and adaptability", he said in a separate statement to The National.
OKX's first investment in the UAE was establishing its workforce in 2021. It then received a provisional virtual assets licence from Dubai's Virtual Assets Regulatory Authority in July 2022, followed by a minimal viable product preparatory licence in June last year.
"Based on our experience with Vara, they have been very focused on consumer protection ... and give us that environment where we can stay disciplined and responsible that also finds room for innovation," Ms Hong said.
The UAE has continued to promote the adoption of digital assets in preparation for the future of finance. Vara and Abu Dhabi Global Market are spearheading this, providing clear guidance on how to navigate and tap into the country's digital asset ecosystem.
These moves have attracted a number of major players in the global digital asset landscape. Earlier this month, cryptocurrency and blockchain solutions company Ripple received an in-principle licence to operate as a payment services provider in Dubai and is in talks to expand its footprint to other Gulf states.
In August, Tether, the world's largest stablecoin, announced plans to launch a dirham-pegged stablecoin in the UAE. In April, the Dubai-based subsidiary of cryptocurrency exchange Crypto.com, Cro Dax Middle East, secured a full operational licence from Vara.
Digital assets, such as cryptos and stablecoins, have long been touted to be able to transfer value across borders, bypassing traditional banking systems and eliminating many associated risks and middlemen. Stablecoins have a market cap of about $172.5 billion, according to CoinMarketCap.
Stablecoins aim to address cryptocurrencies' shortcomings by pegging their value to a unit of an underlying asset, are often issued on faster blockchains and backed by state-issued tenders such as the dollar, pound, euro and highly liquid reserves including government treasuries or commodities such as precious metals.
Also, a stablecoin is different from a central bank digital currency: the former is privately issued, while the latter is government-backed. Both, however, aim to make transactions faster, cheaper and more secure, and would serve emerging markets well.
The UAE has been ranked as the top emerging market across the Middle East and North Africa, and rose one spot to second globally after China, according to the 2024 edition of Kearney’s Foreign Direct Investment Confidence Index released.
"There's now regulation around stable coins ... [which provide] a layer of oversight – that gives consumers an additional level of comfort," Rifad Mahasneh, general manager of OKX Mena, told The National.
OKX launched its exchange in Brazil in late 2023, followed by Australia, the Netherlands and Turkey earlier this year. In July, the company designated Malta as an asset hub, which will enable it to offer its services to more than 450 million EU residents in the coming months. Last month, OKX received a major payment institution licence from the Monetary Authority of Singapore.
Ms Hong said OKX is considering expanding further in other parts of the world. For the Middle East, its focus right now is its UAE operations and the company would branch out to the rest of the region from this base.
