The level of digital transformation in payments in the UAE has changed consumer behavior, showing the growing appetite for crypto and blockchain, claimed John Hensel, co-founder and CEO of Securrency, an Abu Dhabi-based technology firm.
In a survey conducted by The National News two months ago, half of UAE citizens said they plan to use cryptocurrencies within the next year, while 63% admitted they are more open to using them now than they were a year ago.
John Hensel said he sees no surprise, as the Middle East has established itself as a global hub for innovation in financial technology, mostly due to the policies framed by regulators in the UAE, who understand that the world is increasingly adopting cryptocurrencies and blockchain technology.
This progressive approach for fostering innovation has been a major influence on blockchain startups setting up in Abu Dhabi, noted Hensel. Regarding it as the “Fourth Industrial Revolution,” the UAE government is a leading advocate of blockchain technology. In 2018, to advance this adoption, the UAE launched the Emirate’s Blockchain Strategy 2021, essentially creating a deadline for migrating at least 50% of all government transactions onto decentralized technology.
By Hensel’s words, a framework for operating crypto-asset businesses introduced in 2018 by the Financial Services Regulatory Authority (FSRA) of the Abu Dhabi Global Market (ADGM) represents an attractive and permissive regulatory apparatus with continuous engagement and refinement. He sees the regulatory landscape in the ADGM as a driving force behind the Middle East’s growth as a crypto and blockchain innovation hub.
The tech businessman believes it has allowed Abu Dhabi to become an attractive jurisdiction for large and small blockchain, fintech, and crypto companies. He mentioned as an example: the FSRA is one of the first regulators in the world to recognize stablecoins and define fiat tokens, with the Digital Asset Exchange receiving the green light for operations under that formulation.
According to John Hensel, the substantial government resources that have been brought to bear on financial technology innovation have created tremendous opportunities to develop businesses and have encouraged a vibrant entrepreneurial spirit, making this evident throughout the ADGM community.
In particular, Hensel noted the world-renowned universities and education system of Abu Dhabi, including the NYU Abu Dhabi campus and Khalifa University, recognized as the top university in the UAE. Many graduates of these institutions have gone on to contribute to cutting-edge technological developments such as blockchain and artificial intelligence, helping to make Abu Dhabi a leader in global innovation.
Supported by Abu Dhabi’s Ghadan 21 stimulus program, Hensel said, the Hub71 accelerator community in ADGM has succeeded in attracting 102 startups to Abu Dhabi. Additionally, data from a startup platform showed that the UAE led the Middle East region in investment growth by the number of deals and funding in the first half of this year and that fintech startups closed the most deals.
In addition, a businessman mentioned Fintech Abu Dhabi, MENA’s leading fintech festival, as an event that attracts investors and entrepreneurs to the region.
Hensel sees as the level of digital transformation in payments has had tangible effects on citizens, leading to changes in consumer behavior. Recent research from the online portal Fintech News Middle East showed that 2020 saw an increase in digital payments and a rise in fintech companies based in the UAE; 134 fintech firms have their headquarters in the country. The majority of these are companies focused on payment/e-wallet, blockchain, and cryptocurrency.
According to Hensel, this shows a strong appetite for crypto and financial innovation in the region. Where over the past two years, the total value of digital payment transactions In the UAE alone has more than doubled and reached $18.5 billion in 2020.
Aside from a positive regulatory approach, the businessman noted how the pandemic changed people’s behavior, especially in their openness to digital payments. The survey that found half of UAE citizens amenable to using cryptocurrencies next year also showed that two-thirds of UAE respondents had, throughout the pandemic, tried a new payment method they would not have used under normal circumstances.
Hansel listed other factors as well, such as regulatory pragmatism, investor protection, and tax incentives. They helped enormously to create ADGM’s optimal framework for investment, and blockchain, and crypto innovation.
Abu Dhabi’s ecosystem has played a critical part in digital transformation so far, and, clearly, it shows no signs of slowing down, resumed Securrency co-founder and CEO.