How the forward-thinking Gulf nation is becoming a booming capital for cryptocurrency businesses, writes Rebecca Anne Proctor for Jewish Insider.
The United Arab Emirates has long been considered a desirable destination for doing business. Now, the Gulf nation appears poised to become a global hub in the burgeoning — but controversial — field of cryptocurrency. As more and more countries seek to ban or impose strict regulatory measures on cryptocurrency, the world’s largest crypto trading platform, the Chinese company Binance, is going all-in on the UAE. At the same time, a surge in the buying, selling, and creation of digital assets called NFTs — or Non-Fungible Tokens — is also taking place in the UAE.
“The good news about the UAE is that they are welcoming this new technology versus places like America and China — America’s and China’s loss is the UAE’s gain,” Jamil Abu-Wardeh, director and co-founder of METKAF.com, a crypto learn-and-launch company in the UAE, told The Circuit. “The UAE has realized that you need to have the right people and technology in place to make this something you can monitor.”
At the end of December 2021, Binance struck an agreement with the Dubai World Trade Centre Authority (DWTCA), which is in the process of establishing an international virtual asset ecosystem. With the deal, Binance became one of the first cryptocurrency exchanges to join DWTCA’s new crypto center, which according to bitcoin.com, is set out to become a “comprehensive ecosystem for cryptocurrencies and providers of related services.” In its announcement, Binance said “it believes that Dubai’s new agenda will contribute to the growth of the global economy” and that through the agreement it would help advance “Dubai’s commitment to establishing a new international Virtual Asset ecosystem that will generate long-term economic growth through digital innovation.”
On Dec. 21, 2021, Changpeng Zhao, the CEO of Binance, tweeted just one word — “Dubai” — after the company had signed the agreement with DWTCA. With a new worth of $96 billion, Zhao — also known as CZ — rivals tech titans such as Facebook’s Mark Zuckerberg and Google’s Larry Page, and is banking a lot on Dubai.
In November, Zhao bought his first home in Dubai in a show of support for a city he has described as “very pro-crypto.” In December, Bloomberg reported that Binance was in talks with Dubai and Abu Dhabi with officials from the special economic zones Abu Dhabi Global Market, Dubai International Financial Centre, and Dubai Multi Commodities Centre about its plans in the Gulf nation.
A potential Binance headquarters in Dubai signals much about the booming crypto scene in Dubai, especially as it continues to face global regulatory pressure. Founded in China in 2017, Binance is striving to establish itself as a regulated and mature finance institution. Despite recent crackdowns by regulators across the globe, trading volumes at Binance soared between July and August, suggesting that it had little impact on the platform’s business.
While many countries have moved to ban the use of Bitcoin (BTC) and digital assets, UAE regulators have taken a different approach by pushing forward its vision to become a blockchain capital via specific frameworks designed to guide crypto businesses on how to operate within the Gulf nation’s laws.
“Binance controls 70 percent of crypto transactions, and the fact that it is being headquartered in the UAE is further proof of how the UAE is becoming a capital for crypto and digital assets,” said Abu-Wardeh.
As interest in blockchain and cryptocurrencies grows globally, it is increasing exponentially in the UAE as the global economy shifts to include less traditional modes of money transactions, such as digital wallets, that can hold both fiat currency and cryptocurrency.
In May 2021, the DMCC Crypto Centre launched to promote cryptographic and blockchain technologies in Dubai. It is now home to over 100 organizations operating in the crypto space, with a further 900 having applied for licenses. There are more than 400 crypto businesses now operating in the UAE.
Within the UAE’s welcome arms to crypto, a surge in the buying, selling, and creation of NFTs is also taking place. NFTs are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. However, unlike cryptocurrencies, they cannot be traded or exchanged at equivalency because they are unique representations of real-world assets.
NFTs exploded onto the art scene in February 2021, when artist Michael Joseph Winkelmann, known as Beeple, sold his first NFT artwork at Christie’s auction for $69.4 million.
In November 2021, the percentage of people who own a non-fungible token (NFT) in the UAE was more than double the global average, according to a survey of 28,000 people conducted by Finder.com.
According to the survey, which polled 1,004 people in the country, 23 percent of people in the UAE own at least one NFT. The average rate of NFT ownership around the world was found to be 11.7 percent. The UAE is ranked fourth-highest on the list, behind the Philippines (32 percent), Thailand (27 percent), and Malaysia (24 percent). After the UAE, Vietnam had 17 percent. On the other end of the spectrum, Japan had the smallest at two percent, followed by the U.K. and the U.S. with three percent, Germany at four percent, Australia and Canada at five percent.
“I feel like the new generation coming out of school feels like they can’t play in the normal industries: banking, legal,” Liontree founder and CEO Aryeh Bourkoff said on a recent episode of Boardroom’s “Out of Office” podcast. “ Like, what’s the point of going through the normal school system? What’s the point of going through the normal banking programs, going into the stock market? Ten percent of people own 90% of stocks. And they’re thinking, what’s the point of entering a race starting with one? That is informing the mindset of creating NFTs: a new asset class; crypto: a new currency; Metaverse: a new internet world. It’s not just innovation, it’s creating new worlds.”
For the UAE’s 50th birthday celebrations last month, the country’s postal operator issued NFT stamps to celebrate the federation’s National Day.
Dubai Culture has also ventured into NFT art with its latest exhibition — a collaboration with NFT curatorial platform MORROW, which opened on Jan. 15 at the Al Safa Art and Design Library. Titled “50/50” to mark the UAE’s 50th anniversary, the exhibition includes works by Gigi Gorlova, Khalid Al Banna, Alia Al Gaoud, Dalal Ahmed, and Marwan Shakarchi.
“We founded MORROW in March 2021,” said co-founder and artist Jen Stelco, who was introduced to NFTs last year. “Just under a year ago, gallerists and traditional artists were hearing a little bit about NFTs, and it was scary.”
At the time, it seemed an individual had to either be a traditionalist or into NFTs — you couldn’t be both. It also seemed like there was no room for art galleries in the NFT sphere, as NFT artists upload their work onto virtual platforms, leaving no need for it to be exhibited physically.
“Galleries were not on board with NFTs, but we love galleries, so we sought to find a way to bring galleries into NFTs by building a platform that is for galleries,” explains Stelco.
Stelco and her co-founder Anna Seaman co-curated their first NFT exhibition for the digital art marketplace SuperRare in February 2021 called “Orchestra of Crickets.”
“This was arguably the birth of the MORROW idea,” added Stelco. “It worked, and so we decided to go ahead.”
Also jumping on the digital art-cum-NFT bandwagon is Art Dubai. For the art fair’s upcoming 15th edition in March, it launched a new digital art section examining the context from which NFTs, cryptocurrency, video art, and virtual reality developed since the beginnings of digital art in the 1980s.
“There is a thriving crypto scene in the UAE,” said Chris Fussner, curator of the new section and a web3 specialist and director of Tropical Futures Institute, a leading design strategy studio in Cebu, Philippines. that elevates early-stage artists and web3 tech startups. “The main reason is mostly due to macro forces. By being so agile with their policy, especially in today’s world, the UAE government has looked at web3, blockchain, and crypto as a good bet for taking on the future. Dubai is a forward-facing city and it has to look towards the future in order to remain competitive in today’s global landscape.”
Art Dubai’s new section will include a dedicated gallery section featuring international platforms working with NFTs as well as those that have been working with digital art since the 1980s. It will also include a space introducing visitors to the main players in the digital world, with explanations of where to buy bitcoin and trade in crypto, among other activities.
The latest and perhaps most symbolic representation of the UAE’s NFT boom comes in the form of the historic Pontifex carpet woven by Afghan women and gifted by Sheikh Mohamad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and deputy supreme commander of the UAE Armed Forces, to Pope Francis in September 2016 during a visit to the Vatican. The two leaders met to discuss the strengthening of existing diplomatic ties and the promotion of inter-religious harmony and tolerance. The Fatima Bint Mohammed Bin Zayed Initiative (FMBI) has replicated the physical version of the carpet to be gifted to whomever buys it as an NFT.
It was sold on Jan. 14 for 300,000dhs ($82,000 USD). The MORROW collective helped create the NFT in collaboration with Zuleya, and sold the NFT through the NFTone platform.
The new owner will receive the physical replica of the carpet and an ornate gold frame on a 165-centimeter digital canvas with the NFT loaded onto it. The money will go to aid vulnerable families in Afghanistan. The charity sale of the carpet is in itself an expression of the UAE’s new digital landscape — as well as its aims for interreligious and inter-cultural tolerance.