The UAE has become a powerhouse in the crypto world. But why?

Transcript

Ready? Thanks for joining this talk. My name is Charles. I'm at the dYdX Foundation, but I'm here today to talk to you about the UAE and what's happening in the Middle East when it comes to crypto ecosystems overall. So maybe I'd like to start with a show of hands. Anyone of you is living in the UAE or thinking of moving to Dubai or expanding in Dubai? Not yet. So I hope I'm going to give you a flavor of what's happening in the region and why essentially the UAE has morphed into one of the crypto capital of the world and and how I am I kind of studied this and documented this ecosystem so people can understand why we've got so many

champions of crypto in that region even though it's very much in the news right now. We're going to try to abstract this for a bit. I'm going to touch on the war happening in Iran also at the end, but essentially I wrote this this book called Arabian Crypto. Sorry, it's going to come back. Uh Here we go. Uh about the crypto ecosystem. And this is my second book on crypto. My first book was about the crypto ecosystem in Hong Kong. I've been living in Hong Kong before Dubai for 20 years and I've been trying to document and and and connect with the ecosystem overall over there and explain how those ecosystems are essentially growing and why it's important for you to understand this part of the the crypto family in

different corners of the world. So I will try to structure this conversation around the journey of the country then trying to categorize a little bit some of the pioneers I met and interviewed in the context of my book. Hopefully helping you to kind of identify yourself with some of the journeys of these key crypto entrepreneurs which are living in the UAE and and thinking about the future of this of this set of of of states and emirates and and how they can be impactful for your protocol, your businesses around the crypto the crypto ecosystem. So my name is Charles.

This is my second book on crypto. My first book was BlockKong about the crypto ecosystem in Hong Kong. I interviewed many of the entrepreneurs you know which have been starting or growing their business from Hong Kong. And my personal life brought me to to the UAE. So I decided to kind of go with a second a second book documenting [clears throat] the journey of all those pioneers in crypto and understanding why are they in the UAE and and what does it brings to them. I was with ConsenSys before working with with dYdX. I also spent some time at the Hong Kong government as head of fintech.

So I've got this kind of lenses of very much deep into the the crypto industry from ConsenSys, but I also spent some time at at governments shaping cities, shaping ecosystems. So I'm with the dYdX Foundation and I'm also an advisor to one of the Ethereum dot DAT listed on Nasdaq called BitDigital. The history of the UAE is an history which goes very much centuries in the back. The the country and we're going to double click on the geography later on started with the traditional trade being essentially a link between Asia and Europe when it comes to trading all kind of commodities.

One of the first business which really helped the region to kind of move away from this this basic trade was the business of pearls. As the pearls used for necklaces, it was a very much a very fast growing industry. It was very much in fashion at the time. Around the 70s early 70s they discovered oil and this was basically a very big event for the region. It kind of accelerated in an exponential way the growth of the city. They've been going through the same crisis as we we all had the global financial crisis, COVID and and now the Iran crisis, but you will discover over time that over this

presentation that >> [clears throat] >> this kind of new nations new states are extremely agile and don't have the same kind of legacy weight on their shoulders as as some other part of the world. So if you're not familiar with the UAE, the United Arab Emirates, it's essentially a patchwork of seven different you can call states, but they're called emirates by the nature of their of their geography. The biggest one is Abu Dhabi. The second one which is in the mind of many is called is called Dubai. And then you've got some some other states which are which are smaller and and probably have different focus or not so much in the in the in the front line of our crypto conversations. So Dubai is not a

country. Dubai is a state within the UAE. Same for Abu Dhabi. In this talk I'm going to probably double click for the most part into Abu Dhabi, Dubai and Ras al Khaimah also which are the the main states of the main emirates within the UAE focusing on on on crypto. So from this map you can see that eventually the UAE is not only one country, but it's very much some kind of patchwork or a quilt of jurisdictions. And within those jurisdictions essentially it's it's not a monolithic country. It's every jurisdictions like a little bit like every state in the US or or or some other part of the world will [clears throat] have chosen different

focus on how they essentially approach the world of digital asset and the technology of of crypto. So you've got Dubai which have created a few years ago a dedicated autonomous regulator for the crypto assets. That's very interesting to see how they approach. They're not basically trying to make crypto fitting in the existing regulatory framework they have already in place, but created a separated independent regulator for this this this industry. Abu Dhabi has ADGM. ADGM stands for Abu Dhabi Global Market and they've got a different approach over there where essentially crypto comes within the existing TradFi type of ecosystem.

But with very novel and very ambitious and very fresh look at the at the at the industry. You've got Ras al Khaimah which is more focusing on the DAO side and much more diverse in terms of different licenses they will offer be offering to companies should you be in gaming, should you be a DAO. So they're very much agile in in kind of welcoming and helping very [clears throat] exotic projects into how they they can get some some basic license and and operations. And then you have DIFC which is like a a mini state within Dubai kind of a free trade zone with its own regulation, own rule of law and [snorts] and tax systems as well. And this DIFC type of of of jurisdictions within the

the UAE is more focusing on bridging TradFi and and crypto. Within this book Arabian Crypto I I published late last year. I did 15 interviews with 15 different entrepreneurs. Some of these faces might be familiar to you. Some of those are maybe a little bit less less known. It's it's a sample. So by definition it's not covering everyone, but I can tell you living in the UAE that some of the global elite of crypto is deep rooted in the into the UAE or living full time there or operating partially there. And I've been trying to sample these those those pioneers and entrepreneurs in in crypto in the UAE

covering the regulators, covering people building layer ones, building crypto applications or maybe also building centralized exchanges. One first subset of talents I would like you to pay attention to in the UAE is essentially the government and regulators. So I did three interviews with Dr. Marwan which is the founder and CEO of the Blockchain Center in Dubai. I also spent some time with VARA the dedicated regulator in Dubai for the I spent time with ADGM the regulator of the of Abu Dhabi.

And also with a gentleman called Sagar which is which has been very influential in in shaping the early days of policies and strategies from all those those regulators. [clears throat] What's you the takeaway of these four interviews with with kind of government [clears throat] related players is that they're not trying to force crypto into into the existing set of rules they have, but very much approaching it as an opportunity and and dedicating some specific specific frameworks of of regulations to make it really make it happen. And they're really trying to integrate this crypto opportunity within the nation overall.

Another subset of pioneers are the builders. Some of them [clears throat] you know Sandeep from Polygon is living in the UAE for a multiple for multiple years. He brought a big part of his team in the UAE as well. Fisher Yu from Babylon Babylon Labs is also operating for the most part from from Abu Dhabi. Alex Scott from the Solana ecosystem and the president of the Solana Foundation are now living in the UAE as well. And they are when you've got this top executive moving into one region there is this kind of uh flywheel in terms of talent. They they tend to bring in the same the same country some of their their team core team

members and also bringing part of their ecosystem. You've got some OG's such as Orbit one of the former executive director of Orbit. Some of you might remember this project is also living in the UAE. On the risk taking side the team of Symbiotic is for the most part also based in the UAE. And so, talents are moving over there. I often qualify the UAE as a mini America where it's What I mean by that is the UAE is a very young country, 54 years old, but it's it's a country made of for the most part immigrants. So, what I mean by a mini America is everyone is moving to the UAE with their own ambitions, with their own

dreams, and this create a very specific type of energy. It's very creates a very specific energy [clears throat] around the around the city and around the people who get surrounded for. So, a lot of talents coming in one place, and this is a receipt which has been applied by the US in New York or California, Hong Kong for a part of its history as well. So, this is a way for you to feel how you can be surrounded by by >> [clears throat] >> by builders and by by innovators by going and spending time within those those hubs.

Another subset of the industry and another subset of pioneers are essentially the exchanges of the and the wallets within this book which is which is available for you to to read and study. I spent time with Talal from CoinMENA who sold his his crypto exchange to Paribu, one of the leading [clears throat] exchange in Turkey. I spent some time with Owen Cheyne which is the CEO of Trust Wallet, part of the Binance ecosystem. Also a great interview with Luke from Deribit. Deribit is operating from the UAE with a license from from from from VARA. They sold their business of crypto derivatives to Coin base for 2.9 million. So, there are also some some

unicorns and some really great entrepreneurs and and real businesses happening there. What I want as a takeaway for you to really capture and take back with you is that the UAE is not only like a tax a tax kind of arbitrage. It's very much a place where people are also having great successes. You We talked as well together with with Rukaiyah Khan from the Binance marketing team. She's a global head of Binance for for marketing. >> [clears throat] >> And Binance obviously today has a license in ADGM, a global license, and their core team in this is a core business of the world's largest crypto exchange is actually in the UAE, and every decision is made from from there.

So, that's another point I want to to really bring to you is that some of the very big makers are actually living there, and that creates a very unique unique unique ecosystem. On the institutional side and service providers, it also brings and grow organically a very interesting ecosystem. Nouriel Roubini, Jess from Nomura and Laser Digital Bank, Navin Gupta from the from the analytics side of things, some some lawyers obviously, some people from the from the the Cosmos ecosystem such as Crypto CTO, and some and some talent scouts or headhunters are also living there, and they are contributing to essentially keeping this ecosystem growing the right

way and growing stronger. Five [clears throat] key learnings from the book are definitely around the regulatory innovation. The unfair advantage the UAE have is really that they they're building with a very young legal kind of framework around them. They don't have all the legacies the US, Europe, or certain part of Asia will have. And this allows them to really build up-to-date and and and meaningful set of regulations for for this this new industry that that is crypto and not retrofitting some some existing regulations.

We find also that the ecosystems ecosystems within the UAE are kind of specializing themselves. If you go to Abu Dhabi, you will find much more hedge funds and very large institutionals involving crypto. When you go to Dubai, it's much more around the exchange and and maybe medium-size type of of investors and trading platforms. And Iraq will be a little bit more exotic type of crypto-related activities. It's very cosmopolitan as I mentioned earlier, the UAE is rich of 90% of its population being immigrants should they come from from Asia, from from Europe, or other part of the world. So, this create this unique mix

which you will find in some in successful international hubs. The geography of the UAE is also an unfair advantage. It's sitting very elegantly between Asia, Europe. You can when you work from from Dubai, you can essentially work with the world without stretching your day so much, spending time with Asian players in the morning, taking care of European partners and colleagues during your day. And when come 4:00 p.m., New York is already waking up, and you can you can do what you have to do with with your New New York counterpart. So, the geography is also very important for for the the success of the UAE overall. And then, there is also this this idea that the UAE

Dubai, Abu Dhabi are kind of um um kind of far far west so to say or far east when it comes to regulation, but this is really not true. People getting licenses in in the UAE are making the effort. The licenses are quite demanding, and they are picky for before giving away the kind of green light for for business operating there. So, it's not easy it's not easier to get licenses over there, but you got better licenses which will fit with with your your type of activities. There are nevertheless some challenges for for the UAE, for Dubai, for Abu Dhabi.

The fragmentation you you observe in terms of geography and the kind of patchwork of different emirates is a challenge. Whenever you come and approach the UAE for for your business, you want to think which state or which emirates within within the UAE will be best suited for what you want to achieve should you be institutional, small tech-oriented, or more more kind of retail. So, there is a little bit of complexity over there, nothing overwhelming, but it it it exists. The ecosystem is also nascent even though it's growing very strongly, it's still a young ecosystem, so you will not find every parts of everything you need, but it's it's kind of in a in a small geography, so it it kind of mitigate

this this this this young aspect of the of the ecosystem. Third-party access banking is not easier than it is for European or American as a crypto company. You always want to make sure you you think deeply about your banking banking applications to make sure you get like the right setup. And the compliance cost because the UAE is a compliant type of jurisdictions exist and can be sometime a challenge for for projects which have not calibrated or prepared for it the right way. There is in the regions of the UAE and GCC a conflict right now, the Iran conflict as you know. So, it brings a little bit

of anxiety. Probably people are rethinking at this moment in time should I go or not in in that region, but what I what I can tell you for for a fact that it's over the the past decades, the UAE has recovered very quickly from any challenges coming their way should it be the global financial crisis. If you think of COVID, COVID essentially was a demonstration that countries like the UAE are able to reopen very quickly. In March 2020, essentially the global aviation networks just shut down for for all of us, but a few months later in July, the UAE was the first country to fully reopen

>> [clears throat] >> and essentially show show show strength and dynamism over there. So, if you think of the number of migrants also happening during this complicated years of post-COVID and and recovery from COVID, the UAE has gained 2 million additional citizens between 2021 and 2025. So, it shows you that if you have a an attraction at this at this moment in time for for Dubai, Abu Dhabi, or all the regions, you're not the only one, and many people are essentially going to this new and and exciting exciting part of part of the world. So, don't think the UAE are are kind of done. The the conflict in Iran will eventually

kind of cool down, and the history shows that in the past, these young nations, the same way the new technologies or the new value propositions such as crypto really enable part of the world to rebuild and and and having having a bright future. So, I am very happy to talk to you later on after this after this presentation to to kind of share with you more about the the the kind of insight I have from living here in the UAE, and I'm sure that even though you might not be in Dubai or Abu Dhabi next month, I'm sure you will be traveling again and and and visiting this this very inspiring new country in the coming quarters. So, thank you very much for your time today. If you

want to know more about the the UAE and the book, head to arabiancrypto.xyz. Thank you. >> [applause]