The COVID-19 era has brought tremendous changes in the finance industry. As more individuals and organizations go digital amid lockdown policies and border restrictions, the industry has witnessed a surge in digital transformation. Today, digital assets have dominated the market with a wide range of digital instruments built on various technologies and frameworks. This became a trending topic in recent months in discussions about individual investments, while governments all over the world continue to remain divided on how to best regulate them.
Dubai’s Framework for Regulating Digital Assets
The UAE has been advancing its stance as one of the technological innovation hubs of the world. The UAE Minister of Economy even declared that the country’s goal to double its economy in ten years will rely heavily on cryptocurrency and asset tokenization. Subsequently, the Dubai Financial Services Authority (DFSA) fully embraced the adoption of cryptocurrency and blockchain technologies when it announced on October 25, 2021 that it implemented a regulatory framework for investment tokens, a security in the form of a crypto-asset, traded within the Dubai International Financial Centre (DIFC). According to Peter Smith, the Managing Director of the DFSA, this creates an ecosystem for firms to thrive on the ever-growing UAE crypto market.
One of the key features of the framework is to facilitate the admission to trading of investment tokens of DFSA-regulated exchanges, and implement system requirements applicable to trading venue operators. Aside from these, the framework also aims to provide direct access to trading venues in Dubai, deviating significantly from the traditional model of trading.
This regulatory framework covers all interested parties in the marketing, issuance, and/or holding of investment tokens from DIFC-authorized firms desiring to undertake financial services relating to crypto-assets.
Digital Asset Market Outlook in Dubai for 2022
As more consumers turn to digital assets with online payments, interest in cryptocurrencies have grown, especially in the UAE. With this, a survey by Nickel Digital Asset Management found that many institutional investors in the country have planned to enhance their exposure to digital assets between 2021 to 2023, demonstrating the ever-increasing demand for the same among professional investors. Moreover, the central bank of UAE has announced that it will be launching its first digital currency as part of the 2023-2026 digital strategy, positioning the country among the world’s top central banks.
With the adoption of digital assets by individuals and organizations across the country, and with the plan to fully adopt digital assets as an official currency, recent reports have shown that the UAE Securities and Commodities Authority is already finalizing a legislation that would authorize the issuance of licenses for virtual asset service providers (VASPs) by the end of the first quarter of 2022. Currently, the Dubai Multi Commodities Center houses 22 VASPs, which, after the implementation of the said legislation, is predicted to increase exponentially. Specifically, by 2022, Dubai expects more than 1,000 cryptocurrency businesses to be operational.
If you are looking to gain a high return of investment in Dubai’s crypto market, 2022 may be the best year for you. For real-time investment advisories that would enable you to enjoy ultimate security, seek the help of investment groups like AIX Investment. With the knowledge and expertise of their financial advisers, you can traverse fluctuating financial markets and grow your capital.