The latest reports indicate Dubai is poised to venture into the crypto world and tap into the enormous blockchain potential. Through the Dubai Multi Commodities Center (DMCC), the country has created the Crypto Center, a space for companies developing cryptocurrency and blockchain technology.
The Crypto Center comes in the wake of the country’s partnership with Switzerland’s CV Labs, the company spearheading the Swiss-backed Crypto Valley. The Center is expected to form an ecosystem for blockchain, cryptographic, and distributed ledger technology enterprises in the UAE.
Cryptocurrency has exploded onto the scene in recent years, and it’s no wonder that some governments are beginning to embrace it. Despite the common concerns over its effect on the regular currency, many people and businesses across the globe continue to use it.
This digital or virtual currency secured by cryptography is nearly impossible to counterfeit or double-spend because it’s based on blockchain technology. Cryptocurrency derives its name from the encryption techniques used to secure the crypto network, making it immune to central authorities.
Word from DMCC executive director
Ahmad Hamza, the free zone executive at the DMCC, hailed the move terming it “a fantastic new development”. He emphasized that the crypto and blockchain technologies would transform supply chains and global trade immensely, noting that it was perfectly in line with the DMCC’s vision of driving future trade for the UAE.
Hamza expressed hope that the crypto Center will soon fill up with companies looking to scale up their digital currency businesses. However, he fell short of disclosing the number of businesses and entities the DMCC was expecting to draw to the Center.
The DMCC oversees companies and businesses involved in the trade of commodities ranging from pulses to diamonds. It has grown in popularity over the years, receiving up to 2,050 new companies last year alone. This was the highest figure recorded in the last five years for the free zone.
Role of the Crypto Center
The Crypto Center has its work clearly cut out. It will be home to all types of crypto businesses, ranging from companies that issue, list, offer, and trade crypto assets, to those developing blockchain-enabled trading platforms.
Throwing his weight behind the Center, Thani Al Zeyoudi, Minister of State for Foreign Trade, confirmed the central role it will play in boosting the use of digital currencies in the country. He said the Center will support all types of crypto businesses and play home to a comprehensive system for pioneers, innovators, and entrepreneurs in crypto and blockchain technology.
Blockchain is the technology behind cryptocurrencies, such as Bitcoin, and is a digital chain of transactions connected via cryptography, a medium for secure communications on open ledgers. It employs a real-time database with tamper-proof records because every change would create a new record.
The high level of security and integrity of the crypto database makes it quite attractive to businesses and organizations whose activities involve large sums of money, and which they need to handle securely. The UAE wants a piece of this pie and has moved to establish the Crypto Center to tap into this immense business opportunity.
Blockchain in the Middle East
The use of crypto and blockchain spending in the Middle East and Africa has grown tremendously in the last five years, at a rate of more than 70%. In fact, it is expected to hit a whopping $307 million this year, if reports by the US-based International Data Corporation are anything to go by.
Initially, there was reluctance on the part of individuals and governments based on security and economic concerns. The highly confidential and anonymous nature of blockchain transactions may make it possible for criminals to exploit them for money laundering. Economically, it was feared cryptocurrency would destabilize regular currencies.
But with regulations and measures in place, blockchain can be harnessed for legal purposes and used to propel a country’s economy to the next level. Dubai has taken a step in the right direction, establishing a center where all companies and organizations wishing to deal in cryptocurrency can practice their trade in a safe environment.
The benefits of cryptocurrency and blockchain to UAE
The UAE is among the early movers in the Middle East tapping into the great potential of blockchain. Already, the country has embarked on an ambitious plan to switch half of the government transactions to the blockchain platform by the end of this year – in a move dubbed Blockchain Strategy 2021.
The adoption of blockchain is expected to save the country a staggering Dh11 billion in document and transaction costs, up to 77 million work hours, and eliminate the need for a mind-boggling 393 million printed documents a year. The government will channel the massive savings to other important sectors of the economy, and help reduce government spending. This would be crucial in reducing the budget deficits.
It’s also expected that the Crypto Center will, in the next 18 months, outperform many leading blockchain spaces, according to Ralf Glabischnig, founder and board member of CV VC, CV Labs parent company.
Blockchain and cryptocurrency are also likely to spur technology progress in the UAE, attracting lots of interest in the country. Glabischnig said that everyone wants to part of Dubai’s technology journey. This will likely translate into many investors willing to pump money into the project, or other similar areas in the country.
CV VC runs co-working spaces in Zug, Switzerland, and Dubai is home to more than 130 of the leading cryptocurrency and blockchain projects worldwide. Dubai is expected to become a global hotspot for blockchain companies and applications and play a leading role in cryptocurrency innovations. So far, the future burns brightly for the country poised to grow its economy exponentially over the next few years.
Your business can take advantage of the blockchain technology introduced officially into the country through the establishment of the Crypto Center in Dubai. But cryptocurrency and blockchain technology can be quite challenging without proper knowledge of the legal framework. You need to work with professional and experienced lawyers to help you navigate the volatile world of cryptocurrency. Contact HMCO today to start the conversation.