The UAE has all the ingredients to become a globally recognised hub for crypto and digital asset firms, according to the new MENA managing director of Kraken, a global crypto exchange that recently established its regional HQ in the country.
The country is one of the most financially innovative jurisdictions and naturally connects global capital markets, said Benjamin Ampen, noting that it combines infrastructure, some of the highest Internet and mobile penetration rates in the world and a forward-looking regulatory environment.
Founded in San Francisco and serving 9 million clients globally, Kraken announced its UAE launch and the establishment of its regional headquarters in Abu Dhabi in April, after it became the first global virtual assets exchange to be granted a full financial licence by Abu Dhabi Global Market (ADGM).
Ampen said the company had many good reasons to locate its MENA HQ in Abu Dhabi, and that it has longer term plans to establish itself throughout the Gulf region. One of these is the work ADGM has done in priming the jurisdiction for the opportunities brought by web3, the new blockchain-based iteration of the World Wide Web.
“As a global crypto and digital asset exchange,” he said, “we felt it was essential for Kraken to establish a regional headquarters as it continues its journey of mass crypto adoption.
“The local presence we’ve established in Abu Dhabi has enabled us to truly embed ourselves in local culture and to hire several seasoned employees who understand the pain points and opportunities facing our institutional and retail clients.”
The regulated approach of ADGM was important, he said, to allow clients to feel confident when storing assets.
Kraken’s decision to register with ADGM was informed by existing clients, who said they wanted it to be present in the country, he added. “Therefore, we built strong relationships through collaboration with ADGM and worked tirelessly to understand their marketplace concerns, as well as to address them accordingly.
“As such, our launch in the UAE has been a long time in the making and the culmination of several in-depth discussions and widespread education from both parties. ADGM’s full operational licence is also a game changer for our clients in the region, and their ongoing support is integral to our mission of empowering people with financial freedom.”
“We will soon be granting investors direct access to AED-trading pairs, including BTC/AED and ETH/AED, as well as over 150 cryptocurrencies and fiat currencies around the world,” he said. “Furthermore, our AED–USD trading pair will soon transform how investors in the UAE can access more than 150 coins when funding directly in AED.
“Investors will be able to seamlessly pursue a range of trading strategies, avoiding the need to open multiple trading accounts across multiple exchanges, saving time, money and hassle. This is made possible through partnerships with local UAE banks and payment service providers.”
He said the company planned to address the “cumbersome barriers” in the Gulf to trading within existing markets, such as FX fees when depositing, trading and withdrawing, but for the present, the focus would be on the UAE market, with GCC expansion in the long term.
Binance, the largest crypto exchange by trading volume, has been establishing its presence in Dubai, recruiting more than 100 employees. Commenting on the rival exchange, Ampen said, “We welcome competition as it drives innovation and validates the broader market, providing investors with much-needed choice for buying and storing their assets.
“We believe Kraken’s mission-driven approach, broad product offering, security-first mindset and excellent client service will speak for themselves as we continue to build across MENA.
“We remain the first, and only, global crypto exchange to offer safe and secure trading directly in AED as well as client custody.
“This makes our product offering unique and offers both retail and institutional investors the freedom to take control of where they store their digital assets and become their own bank if they wish.”
Zawya reported this week that cryptocurrencies are entering the deepest phase of a bear cycle. The fundamentals of bitcoin are now deteriorating, and long-term holders are now realising major losses, according to strategists at Glassnode, a blockchain data and intelligence provider.
The world's leading digital asset, Bitcoin, dropped as much as 5.2 percent to $20,833 early Wednesday in London.
According to estimates, the cryptocurrency market saw its total market cap drop by roughly 12 percent on Monday to just $980 billion. The sector has now seen more than $2 trillion in losses since its November 2021 peak.
Ampen said Kraken was “more bullish than ever” about the trajectory of crypto adoption and rising levels of crypto-related activity in the region. “The Middle East is one of the fastest-growing cryptocurrency markets in the world, with transaction volumes in the UAE alone reaching $25.5 billion between July 2020 to June 2021.
“We also know there is significant latent demand for Kraken in the UAE, which is what motivated our launch in the region in the first place.”
Asked if the UAE has what it takes to become the world’s biggest hub of cryptocurrencies, Ampen responded: “Definitely. The UAE has all the ingredients to become a globally recognised crypto and digital asset hub.
“Frankly, it’s no surprise to see the UAE paving the way with crypto participation rates among professional and consumer investors, although demand across the broader Middle East is also undeniable.”
He cited Chain Analysis, Geography of Cryptocurrency 2021, which showed that the Middle East received $271.7 billion worth of cryptocurrency between July 2020 and June 2021, representing 7% of global activity. “With additional capital appreciation, improving regulation, larger liquidity pools, and enhanced education of crypto, we only [expect] this adoption trend to continue to grow, and the UAE to be a beneficiary of global crypto adoption.”
(Reporting by Imogen Lillywhite; editing by Seban Scaria)