The United Arab Emirates (UAE) is rapidly emerging as a significant player in the global cryptocurrency landscape, as evident from the 2023 Henley & Partners Crypto Wealth report. In the global ranking of cryptocurrency adoption, the UAE has secured the third position, closely trailing behind Singapore and Switzerland. One notable revelation is that the UAE shares its public adoption score of 7.1 out of 10 with Singapore, which tops the list.
The report’s assessment of public adoption revolves around measuring the awareness, interest, and engagement levels of the general population with cryptocurrencies. This encompasses various factors, including the percentage of crypto users relative to the total population, Google search interest related to cryptocurrencies, and the availability of educational courses on blockchain and cryptocurrency.
UAE’s Innovation and Technology
When it comes to innovation and technology, the UAE is keeping pace with Switzerland, with both nations earning an impressive score of 8.7 out of 10. However, in terms of the regulatory environment, the UAE lags behind, scoring 5.6 out of 10, compared to Singapore’s 8.5 and Switzerland’s 8.4.
The UAE government took significant strides in early 2023 by introducing federal legislation to regulate virtual assets and virtual asset service providers, placing them under the regulatory supervision of the UAE Securities and Commodities Authority. Additionally, Dubai made history by establishing the Virtual Asset Regulatory Authority (VARA), becoming the world’s first virtual asset regulator. Abu Dhabi also joined the regulatory movement by implementing virtual asset regulations through the Abu Dhabi Global Market (ADGM).
The UAE’s Crypto Regulatory Environment
Despite these commendable regulatory efforts, the UAE’s regulatory environment is still considered less mature than that of Singapore and Switzerland. Henley & Partners’ methodology for assessing regulation takes into account various parameters, including the adoption of Initial Coin Offerings (ICOs), anti-money laundering/combating the financing of terrorism (AML/CFT) regulations, the legal status of cryptocurrencies, regulatory clarity, the development status of central bank-backed digital currencies, and licensing requirements for crypto businesses.
UAE’s Crypto Regulations
Surprisingly, the UAE outperforms Hong Kong in crypto regulation, even though Hong Kong recently established a comprehensive regulatory framework through the Hong Kong Securities and Futures Commission (SFC).
In terms of infrastructure adoption, the UAE faces challenges compared to Singapore and Switzerland, earning a score of 5.9 out of 10, while Singapore and Switzerland score 6.4 and 9.2, respectively. Infrastructure adoption encompasses factors like the presence of crypto exchanges, crypto ATMs, integration with local banks, digital asset exchanges, and the availability of products that can be purchased with Bitcoin.
The UAE is actively working to bolster its crypto infrastructure, but there’s room for growth. Currently, VARA has granted only one fully operational license to Laser Digital Middle East FZE, the crypto arm of Japanese Nomura Holdings, allowing it to offer virtual asset broker-dealer and investment management services in the UAE. Additionally, the Central Bank of the UAE has yet to unveil its digital assets payment regulations, which would streamline the integration of cryptocurrencies with local banks. Furthermore, there is a limited presence of crypto ATMs in the UAE.
However, the UAE stands out with a perfect score of 10 out of 10 in the realm of crypto taxation. Unlike Singapore and Switzerland, the UAE does not impose taxes on cryptocurrencies.
In conclusion, the Henley & Partners report positions the UAE as an attractive destination for crypto investors, boasting strong public adoption and favorable tax policies. While challenges persist in the regulatory and infrastructure domains, the UAE is making significant strides toward establishing itself as a global leader in the cryptocurrency landscape.
[…] – UAE’s Growing Role in the Global Crypto Scene […]