Over the last few years, the UAE (especially Dubai and Abu-Dhabi) was trying to promote itself as the Virtual Asset hub for the world. In March 2022 VARA, the institution which is responsible for creating an advanced legal framework for virtual assets, was created. Other important steps were the release of Dubai Blockchain Strategy in 2016 and the launch of the Dubai Metaverse Strategy in 2022. Now over 11% of the population owns cryptocurrency and the country continues promoting crypto by hosting multiple startups, providing companies with funding and access to blockchain and virtual asset infrastructure and working on the further development of the legal framework.
At the Dubai Fintech Summit which took place on 8-9 May many executives pointed out that the UAE regulators are ahead of others, and that the clear and advanced crypto framework may promote the country as an international crypto hub.
Coinbase CEO Brian Armstrong said the UAE is “leading the way regionally” in crypto. According to him, regulators in the UAE are ahead of the US and “the UAE’s approach has been more forward-thinking than the US.”
Armstrong was not the only one who blamed US regulators for being inefficient compared to the UAE ones. “The UAE’s regulatory framework is more streamlined and business-friendly compared to the complex and fragmented regulatory environment in the U.S,” - said Crypto Oasis co-founder Saqr Ereiqat at the summit. Ripple CEO Brad Garlinghouse also shared his discontent with U.S. regulations. According to him, defending themselves against the U.S. SEC is about to cost the company $200 million.
Lately, Coinbase has made multiple steps following its global expansion strategy which was announced almost a year ago. The company is currently on an 8-week international expansion drive in 6 continents and cooperation with UAE is definitely a part of it. Also, at the beginning of May, Coinbase announced the launch of a new platform called Coinbase International Exchange licensed in Bermuda and available to institutional users outside of the US.
Now the company announced in a blog post that the UAE has the potential to be a strategic hub for Coinbase. The post also stated that the exchange is currently working with Abu Dhabi Global Market (ADGM) regulators to further expand the licensing and availability for Coinbase International Exchange and also has also been engaging with Dubai’s VARA. Now the Executive team, including Brian Armstrong, are in the UAE for a series of engagements with policymakers, regulators, partners, web3/crypto founders, and clients.
Brian Armstrong told Bloomberg that the UAE could serve as an international crypto hub for Coinbase:
“We are looking for a home to set up an international hub that could serve the long tail of countries in the world. The UAE is well positioned to expand and serve markets in the Middle East, Africa and Asia.”
The attempt to go international and find a “backup” home might be partially connected to the fact that lately things were tough between Coinbase and the US regulators. In March Coinbase got a Wells notice from SEC warning that the regulator might sue the company for multiple violations of law. At the end of April Coinbase publicly responded to the Wells notice and tried to legally force the regulator to respond to a petition for rulemaking that the exchange filed aiming to get proper regulation rules. SEC was legally obliged to respond to Coinbase complaint, but it hasn’t happened yet. Despite all these troubles, Armstrong repeatedly stated that Coinbase is not going to leave the US and is still trying to find a way to cooperate with the regulators and to be working in the country within the regulatory perimeter. Meanwhile, it will continue its global expansion.
Both Coinbase and the UAE are interested in this cooperation, so we expect more news soon. We will follow Coinbase and the UAE on their cooperation path and will keep you updated!