In an exclusive interview with crypto.news, Dominic Longman, senior executive officer of Binance Abu Dhabi, discusses rising institutional interest in crypto, potential crypto ETFs, and the region’s efforts to attract web3 talents.
In February, the Financial Action Task Force (FATF) removed the UAE and several other jurisdictions from its greylist, saying the region “strengthened the effectiveness of its AML/CFT regime to meet the commitments in its action plan regarding the strategic deficiencies that the FATF identified in February 2022.”
Crypto.news interviewed Dominic Longman, senior executive officer at Binance Abu Dhabi, to discuss the implications for crypto in the region following this removal.
Q: With the UAE recently being excluded from the FATF “greylist,” it appears that the region is gaining significant traction. For example, U.S.-headquartered companies like Chainalysis are now establishing offices in the area, so I’m keen to understand if this development has led to a shift in crypto adoption among traditional companies, such as venture capital firms, pension funds, banking giant, or if the exclusion from the grey list has not significantly impacted the local perception of crypto.
A: The UAE’s recent exclusion from the FATF greylist is a positive development for the region’s financial landscape and for the UAE’s position as leading economic power in MENA [the Middle East and North Africa]. It reflects the country’s commitment to improving its regulatory framework and transparency. While it’s difficult to quantify the direct impact on institutional crypto adoption, the international recognition of the UAE’s progress in the fight against fraudulent financing practices such as money laundering is encouraging.
We are observing increasing institutional interest and activity in the crypto space, and we believe this could pave the way for broader adoption among various financial institutions over time. The UAE is at the forefront of crypto adoption globally and has established itself as a leading crypto hub, an ecosystem that Binance is proudly part of and enabling further. By encouraging and facilitating collaboration between key stakeholders within the ecosystem, including governments, regulators, innovators, startups, and established organizations, we can create synergies and accelerate blockchain adoption in the region.
Q: Currently, there are no Bitcoin exchange-traded funds (ETFs) accessible in the UAE. Given the recent approvals of Bitcoin ETFs in the U.S. and Hong Kong, what are the chances that UAE authorities might change their approach? Additionally, how significant could the UAE market become for crypto, considering that Hong Kong, despite its diverse offerings with Bitcoin and Ethereum ETFs, has not attracted as much capital as anticipated?
A: The approval of Bitcoin ETFs in the U.S. and Hong Kong is a significant milestone for the crypto industry, indicating growing acceptance and recognition. The introduction of a Bitcoin spot ETF lends legitimacy to the digital asset industry while building trust in the market amongst a broader audience and has sparked a surge in trading volumes, reflecting increased accessibility to crypto investments for retail and institutional investors alike. While there are currently no Bitcoin ETFs available in the UAE, regulatory approaches can evolve based on global trends and local market demands.
The UAE has shown a proactive stance towards blockchain and crypto innovations, so there is potential for future developments in this area. As for market significance, the UAE’s strategic position and forward-thinking policies on virtual assets have positioned the country at the forefront of crypto adoption and solidified its status as an international crypto hub, as highlighted by the Henley & Partners Crypto Wealth Report 2023 which found that the UAE boasts the highest cryptocurrency adoption rate worldwide.
Q: In Europe, many small to mid-sized crypto startups tend to register in Lithuania, Estonia, or other Eastern European countries due to their relatively simplified regulatory approach to crypto. What challenges, if any, do companies face when starting or developing their crypto businesses in Dubai?
A: Navigating regulatory requirements and ensuring compliance can be complex, but the UAE government is actively working to offer a dynamic environment for crypto startups by developing robust infrastructure and supportive initiatives that provide clarity and streamline business set-up processes.
Some large industry players and regulators such as VARA have identified that moving to a regulated model for virtual assets – one that covers access to banking services, regulatory capital requirements, and people costs, among other areas – is a significant undertaking, but plans that enable collaborative approaches to these issues between stakeholders are already being put in place (i.e. larger firms assisting smaller startups with compliance and legal processes).
The increasing influx of crypto firms moving into the UAE, particularly, has also had an impact on the talent attraction front and has generated a growing talent pool for the industry in the country, bolstered further by government-supported coding schools and other talent-centric initiatives (i.e. visas) making it easier for crypto firms to find the talent they need to grow locally.
Binance has been actively expanding its presence in the UAE, especially in Dubai, due to the Emirate’s leading position in the growth and development of web3 and the favorable and forward-looking regulatory environment and Government initiatives in support of the digital assets ecosystem. In addition, the government’s proactive stance on blockchain technology, as evidenced by initiatives such as the Dubai Blockchain Strategy and the Metaverse Strategy, underscores its commitment to driving innovation in the MENA region.
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