Kraken cryptocurrency exchange has today become the first of its kind to receive a full financial license from the Abu Dhabi Financial Services Regulatory Authority to operate in the region. It is thus planning to establish local trading and investment services and a regional headquarters there.
The company’s digital asset platform will be the first of its kind to make it possible for UAE citizens to invest, trade, deposit, hold, and withdraw crypto in the local currency Dhirams. This is according to the Monday announcement from the Abu Dhabi financial regulator.
Kraken’s managing director for the EMEA region said the company will also launch staking, regulated futures, and an upcoming NFT marketplace in addition to other services. CEO of the registration authority at ADGM Dhaher bin Dhaher said the authority was accelerating the growth of investment opportunities in virtual assets.
The move appears to be in response to the huge crypto business in the region. The Middle East accounts for 7% of global crypto trading volumes, which puts it in the third-place globally. That accounts for over $26 billion in daily crypto trading volume.
UAE’s dominance in crypto trading and business is mainly due to its favorable crypto regulatory environment at a time when some other jurisdictions were tightening it up. It is reported that some crypto exchanges eyeing UAE are moving out of crypto-unfavorable countries like India following new regulations. However, survey after survey also indicates that more UAE citizens are looking to invest in digital assets. Most of them are looking to take up new investment opportunities in digital assets as the economy becomes more digitalized.
The increased crypto and blockchain adoption and the user base are also due to the government’s leading role as an advocate for blockchain and crypto innovations. The plan to promote crypto and blockchain innovations in the region is not an instantaneous one but has been there since at least 2018. The Emirates’ Blockchain Strategy 2021, for instance, is a government initiative that aims at having 50% of all government transactions moved to blockchain technology. Multiple government services are already being provided on the blockchain according to the initiative’s website. The result of the initiative is an increase in digital payment platforms and digital transactions in the region.
Kraken will join Binance, FTX, and ByBit which have also received licenses to operate similar services in the region. Home-grown exchanges in the UAE include BitOasis, Bitex, Matrix, and Glomax, but most of them struggle with liquidity issues and offer limited products when compared to Kraken.