The United Arab Emirates (UAE) has indicated an interest in exploring virtual currencies for international trading as it aims to reduce its dependency on the U.S. dollar.
UAE’s Minister of State for Foreign Trade, Thani Al-Zeyoudi, told Bloomberg that the country would be pivoting to digital assets in 2023 after making significant headway in their regulation over the last few months. Al-Zeyoudi disclosed this at the recently concluded World Economic Forum (WEF) in Davos with policymakers and business leaders in attendance.
“Crypto will play a major role for UAE trade going forward,” Al-Zeyoudi claimed.
The last 12 months witnessed a rapid change in the UAE’s virtual currency ecosystem as the government introduced a new regime of laws to guide the activities of virtual currency service providers.
Dubai, one of the country’s seven emirates, took the lead in introducing the historic Law No. 4 of 2022 (Dubai Virtual Asset Law) that created a new regulator and pragmatic requirements for firms seeking approval to do business in the region. A swarm of virtual currency firms, including Binance and the beleaguered FTX, flocked to Dubai, spurred by the new regulatory stance.
Despite the influx, the UAE maintains that the new firms’ activities will comply with international best practices, with firms facing the stiff penalty of paying $2.7 million for breaching the new law.
“The most important thing is that we ensure global governance when it comes to cryptocurrencies and crypto companies,” Al-Zeyoudi said. “We started attracting some of the companies to the country with the aim that we’ll build together the right governance and legal system, which are needed,” he added.
The UAE could be a rogue state for bad actors
Given the UAE’s progressive policies towards the asset class, there have been fears that the country could be a nesting ground for bad actors in the industry. There are claims that several scammers are hiding out in Abu Dhabi and Dubai, with Terraform Labs’ founder Do Kwon rumored to use the country as a getaway to Serbia.
Al-Zeyoudi dismissed the claims that virtual currency criminals are flocking to the country, urging global policymakers and law enforcement to collaborate in stifling their activities.
“You will see them everywhere. You will see them in the Bahamas, you will see them in New York, and London, and what we need to do as governments is to work together, with the industry as well, to ensure that if someone does something wrong he can’t move from one place to the other,” Al-Zeyoudi stated.
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