Cryptocurrency regulation may be about to reach new heights in the United Arab Emirates. Since Bitcoin was first made available in the Middle East in 2014, the region has welcomed the myriad opportunities cryptocurrency and blockchain technology brings.
The UAE's financial regulator, SCA (Securities and Commodities Authority) is now gathering intelligence from individuals and companies in the cryptocurrency industry to feed in to its final draft regulations. Cryptocurrency exchanges, Forex brokers and financial analysts will all feed in to the development of new regulatory proposals, speeding up the time it takes to agree appropriate principles. The UAE Government recognises that it can benefit greatly from the years of industry expertise these agents bring, providing them with a cryptocurrency guide, while also reducing the time it would take to understand the potential economic impact of cryptocurrency.
It is anticipated that this democratic approach could result in a light-touch regulation of the industry in the UAE. Industry experts believe that those involved in developing the regulatory framework for cryptocurrency trading are in danger of having different, and potentially conflicting, opinions on the right way to regulate their industry. It has therefore been suggested that the process could be segmented, with different agents involved reporting on their specific area of expertise, rather than looking across the industry as a whole.
Even the royal family of the UAE is getting a piece of the cryptocurrency action, by investing a stake in the CPI (Crypto Price Index), which is a blockchain based analog of the Dow Jones. CEO of the CPI Herbet Law said he was delighted to have the backing of the Emirati royal family, and said they share the same philosophy. The CPI will gather data from over 200 popular types of cryptocurrency, in order to develop a tool to analyse industry sentiment across the market.
In addition to this, the Chamber of Commerce in Dubai (DCCI) has signed a MoU (Memorandum of Understanding with Government-owned bank NBD. The bank, one of the biggest in the Middle East, will facilitate trade solutions for Silk Road, a program which utilizes blockchain technology to digitize some of Dubai's trading processes. The Silk Road initiative is being developed to improve the efficiency and transparency of supply chains, in conjunction with partners including DP World - UAE Region and Dubai customs.
The UAE is certainly embracing blockchain technology in a number of ways. For example, Tech Mahindra, the Indian IT firm, is now partnering with UAE's planning department, to improve land registry transparency. With around three quarters of Abu Dhabi's population being non-Emirati, keeping track of rental and lease agreements is challenging. Embracing new blockchain technology will enable the UAE's Department of Central Planning to save time and streamline the processing of land registry documents.
In addition, Noor Finance published its report in 2018 citing the huge potential blockchain technology has to reshape the UAE's trade finance. And Etisalat Digital announced in July this year that it had launched its own blockchain trade platform, called UAE Trade Connect.
It seems cryptocurrency and blockchain technology is garnering a great deal of support and is becoming a growth market in the UAE. It will be interesting to see how the proposed regulatory framework shapes the future for it in the UAE.