The race to become the next cryptocurrency hub in the Gulf region has intensified in recent years, with Bahrain and the United Arab Emirates leading the pack. According to a report by American online publication Stratfor, UAE’s capital Abu Dhabi has especially strived to portray itself as the one-stop shop for all crypto enthusiasts. The two nations have issued licenses to crypto companies, developed crypto-friendly regulation and even invested in crypto startups.
Bahrain and Abu Dhabi stand out in a region where many countries have been cautious regarding cryptos. Kuwait’s central bank prohibits trading in cryptos while Qatar issued a warning last year to all commercial banks against dealing with crypto businesses. Oman and Saudi Arabia have urged their citizens to be cautious when dealing with cryptos.
However, for Bahrain and Abu Dhabi, cryptos have been central to their plans. The two are working to present themselves as the best alternative to the expensive global crypto hubs such as London, New York and California. Citing a study by ZPX, a Singaporean crypto firm, the report revealed that setting up a crypto company in London or New York could cost as much as $750,000. However, in Bahrain, it only costs $200,000, with Abu Dhabi being even lower.
Bahraini policy makers have been on a quest to make life easy for crypto operators. A month ago, the Bittrex-backed Rain announced that it had become the first fully regulated on-shore crypto exchange in the Middle East and North African region. The exchange, which raised $2.5 million, received a regulatory license from the Central Bank of Bahrain after graduating from the bank’s regulatory sandbox. The exchange operates within the Bahrain FinTech Bay, a co-working space and accelerator that receives financial backing from the central bank and other wealthy private backers.
Abu Dhabi, on the other hand, has been UAE’s crypto hub, with the city being home to three crypto exchanges – BitOasis, Arabian Bourse and MidChains. BitOasis has been in operations for four years now, but it’s been MidChains that has received the most attention from investors. Operating from Abu Dhabi Global Market’s accelerator, the exchange has received funding from Mubadala, a state-owned company that has stated its intentions to expand its asset portfolio to about $1 billion by 2021.
There are challenges, however, that face the crypto campaign in both countries. Security is one, with hackers having recently attacked the Bahrain National Security Agency and the Ministry of Interior. There are concerns that such hackers could infiltrate crypto exchanges and lead to financial turmoil. There are also fears of cryptos being used in money laundering and terror financing. Nevertheless, Abu Dhabi and Bahrain are marching on with their crypto initiatives, with each hoping to become the Gulf region’s crypto hub.
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