Crypto Hedge Fund Founder Henri Arslanian explains why the UAE is such a haven for crypto investments and how regulatory clarity can add to investor confidence.

Dubai

The United Arab Emirates, particularly cities like Dubai and Abu Dhabi, has established itself as a key destination for global cryptocurrency firms. This shift is attributed to the region's regulatory clarity, especially through the Virtual Assets Regulatory Authority (VARA), which is recognized as the world's first crypto-specialized regulator. The UAE's approach has attracted a significant number of companies, with over 850 reportedly seeking licenses.

The introduction of the digital dirham and supportive guidance from the Central Bank of the UAE have also contributed to the growth of stablecoins and digital currencies in the region. While other Middle Eastern jurisdictions, such as Saudi Arabia, are still developing their regulatory frameworks, the UAE continues to lead in crypto activity, offering a model of clear rules and industry-specific oversight.

How the Middle East became a global crypto powerhouse

The Middle East now, especially the UAE, has become now the global crypto hub. I think for a lot of crypto firms right now, they look at potentially now setting up back in the U.S. post a new administration. But when it comes to the global headquarters or their headquarters for outside the U.S., the UAE now is becoming often their first choice, whether it's Abu Dhabi, whether it's Dubai, whether it's Ras Al Khaimah, whether it's in the IFC, there's a number of choices. And a lot of these hubs within the UAE are quite complementary in a one plus one equals three relationship, if you want. Now, I don't expect to see more listed instruments across the region for very simple reasons. A lot of the anybody's listing is often going where liquidity is, and that tends to happen in traditional markets that we have. When it comes to certain jurisdictions, when it comes to the KSA, Saudi Arabia, I think we need to see more regulatory clarity before we can see not only listed instruments in crypto, but overall more activity in crypto. And this is why I expect for a really short, medium term, the majority of the crypto activity in the UAE to take place in the Middle East to take place in the UAE. Indeed, and you mentioned this before, but what we are seeing is more support for stable coins and also more support for digital currencies in this part of the world as well, particularly here in the UAE with the recent launch of the digital diram. What impact do you expect that to have and what trends are you seeing in the stable coin and digital currency space that make you most excited right now? First of all, it's important to understand the reason crypto firms are coming to the UAE. It's not because they love the weather. They're here because there's regulatory clarity. One thing that, for example, Dubai has done with VARA, the Virtual Assets Regulatory Authority, the world's first crypto specialized regulator, is to provide a regulatory framework that is very clear and that provides a very baseline that all the companies can operate with. I would argue that it's probably the most stringent crypto regulator in the world. And the beauty for crypto firms is that actually the rules are made for the crypto industry, but a regulator that understands them. And that obviously attracts a lot of crypto firms to come to the region. That also applies across the spectrum when it comes to stable coins. The central bank, the CBUAE, issued some guidance on the topic. And this is why I expect to see over the next year, not only the crypto firms to issue their own stable coins, but also the traditional financial institutions to do so as well with the digital diram. And I think this is going to be very interesting to see what role the digital diram, or let's say the stable coins and potentially CBDC, by the way, play within the growth of the crypto ecosystem. To put things in perspective, Vara, the Dubai crypto regulator, allegedly has over 850 companies in the queue to get licensed. For many years in the crypto industry, all we were asking for were clear regulatory rules that we could come and build our businesses. And this has been a great example of build it and they will come. And this applies to the crypto space. And here, the UEE has been a great example of that.

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