Tag: Uae

Hong Kong’s Ambition to Thrive in Web3: Exploring the Development of Selected Regional Web 3.0 Technologies

by Blockchain News

Hong Kong is actively involved in Web3 and aims to become a global center for digital assets. Recently, the Research Unit of the Legislative Council Secretariat of Hong Kong released a summary of the document titled ‘Development of Selected Regional Web 3.0 Technologies.

According to the summary, the Hong Kong government is actively promoting the development and application of Web 3.0. In the 2023-2024 fiscal budget, the Financial Secretary announced accelerated efforts to build Hong Kong’s Web 3.0 ecosystem and the establishment of a dedicated development task force for virtual assets.

However, concerns have been raised about Hong Kong’s slower development compared to other regions. Various global regions, particularly in Asia and the Gulf region, have implemented measures to expedite the development of Web 3.0 and related technologies and applications.

It is suggested that Hong Kong should not limit its focus to financial services and virtual assets but actively promote innovation in other Web 3.0 technology areas, such as blockchain and metaverse technology.

Responding to a request from Councilor Wu Kit Ching, the research group has studied leading regions in Web 3.0 technology and application development and examined their strategies.

The research primarily focuses on Japan, Singapore, South Korea, and the United Arab Emirates (UAE) as these regions have demonstrated proactive approaches in developing Web 3.0 technologies and have become global or regional innovation hubs. Japan has established high-level policy guidance and dedicated offices to coordinate Web 3.0 policies across government departments.

Other regions covered in the study concentrate on developing specific areas of Web 3.0. For example, Singapore and the UAE are exploring blockchain technology through industry collaborations and establishing incubation centers, while South Korea is actively launching metaverse strategies to foster innovation across various sectors.

The summary also provides an overview of the main characteristics, foundational technologies, and applications of Web 3.0. It outlines recent developments in Web 3.0 in Hong Kong and analyzes the development scenarios of selected regions, including Japan’s comprehensive approach and other regions’ application-focused initiatives.

It highlights that Web 3.0 represents a decentralized network that empowers users with greater autonomy and control over their digital lives. While Hong Kong’s government has introduced measures to support the development of the Web 3.0 ecosystem, particularly in the virtual asset market and related financial services, concerns remain regarding Hong Kong’s slower development in other areas of Web 3.0 technology compared to its counterparts in Asia and the Gulf region. These regions are leveraging their advantages and exploring wider applications of Web 3.0.

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Hong Kong Monetary Authority Explores Virtual Asset Regulation in UAE and Highlights Converging Global Standards

by Blockchain News

According to a report by Ming Pao, the Hong Kong Monetary Authority (HKMA) recently visited the United Arab Emirates (UAE) to discuss the regulation of virtual assets (cryptos) with the local central bank. HKMA Chief Executive Eddie Yue shared that both regions have begun developing virtual assets within regulated environments, with Hong Kong having introduced regulatory frameworks earlier than the UAE. 

Yue also mentioned the recent strengthening of virtual asset regulation in the United States, raising questions about whether other jurisdictions, including Hong Kong, would follow suit or adopt a more relaxed approach. He noted that in the past, Hong Kong had stringent regulations on virtual assets, bordering on prohibition, while regulations in other regions were relatively unclear. However, there is now a global trend towards converging regulatory standards, which will help minimize potential discrepancies in the future.

Eddie Yue also discussed the challenges faced by virtual asset exchanges in Hong Kong when it comes to opening bank accounts. Yue acknowledged that there have been ongoing discussions between the HKMA and local banks regarding this issue. He mentioned that the perception of pressure during these discussions varied among different parties. Yue explained that while the United States previously lacked clear regulatory requirements for virtual assets, places like Singapore and Dubai had regulations in place, particularly targeting functions such as anti-money laundering. Hong Kong, after learning from experiences such as the closure of FTX, has gradually opened up its regulatory approach, aiming for strict yet clear guidelines. The banking industry is encouraged to continuously update its understanding and seek regulatory clarity from authorities.

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Coinbase Executives Visit UAE to Explore Potential for Crypto Operations

by Blockchain News

Executives from the US-based cryptocurrency exchange Coinbase, including CEO Brian Armstrong, have visited the United Arab Emirates (UAE) to explore the potential for crypto operations in the region. The visit comes as Coinbase seeks to expand its international presence and establish strategic hubs in key locations around the world.

During the visit, Armstrong met with policymakers and spoke at the Dubai FinTech Summit, highlighting the growing interest in the region as a destination for crypto-related businesses. The UAE has become increasingly attractive to firms in the crypto industry due to its favourable regulatory environment and abundant sources of energy, which can be used to power energy-intensive operations such as crypto mining.

Coinbase’s visit coincides with a partnership between Marathon Digital Holdings and Zero Two to create a large-scale immersion Bitcoin-mining facility in Abu Dhabi. The joint venture, called the Abu Dhabi Global Markets JV Entity, will comprise two mining sites with a combined 250-megawatt capacity and will be powered by excess energy from Abu Dhabi’s grid.

Marathon Digital’s experience in developing a custom-built immersion solution for cooling mining rigs will be key to the success of the project, particularly given the challenges posed by the desert climate in Abu Dhabi, where temperatures can reach up to 28 degrees Celsius (82 degree Fahrenheit).

The joint venture between Marathon Digital and Zero Two aims to take advantage of Abu Dhabi’s excess energy to power the mining facilities, with a view to increasing sustainability and base load. The use of liquid cooling solutions will help to overcome the challenges of the desert climate, where high temperatures make traditional air cooling methods infeasible.

Overall, the partnership between Marathon Digital and Zero Two represents a significant step forward in the development of the crypto mining industry in Abu Dhabi, as the two companies look to capitalize on the region’s excess energy and overcome the challenges of the desert climate. Coinbase’s visit to the UAE highlights the growing interest in the region as a destination for crypto-related businesses, and could pave the way for further expansion in the Middle East.

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UAE’s Central Bank Nears Launch of Digital Dirham

by Blockchain News

The Central Bank of the United Arab Emirates (CBUAE) is taking significant steps towards the full launch of its central bank digital currency (CBDC) known as the digital dirham. As announced on March 23, the CBUAE has signed an agreement with Abu Dhabi-based G42 Cloud and digital finance services provider R3 to be the infrastructure and technology providers for the CBDC implementation. This is a crucial milestone in the development of the digital dirham and is expected to address the challenges of domestic and cross-border payments, while also promoting financial inclusion and supporting the country’s goal of becoming a cashless society.

The first phase of the CBDC strategy involves the soft launch of “mBridge,” a platform that facilitates CBDC transactions for international trade. The CBUAE is also working on proof-of-concept projects for bilateral CBDC bridges with India, as well as domestic CBDC issuance for both wholesale and retail use. These initiatives are expected to be completed within the next 12 to 15 months, according to the CBUAE’s announcement.

The digital dirham has been in development since 2019, with the CBUAE conducting extensive research and analysis to ensure the successful implementation of the CBDC. The CBUAE has also engaged with various stakeholders, including financial institutions, merchants, and other entities, to gather insights on the requirements and potential benefits of a CBDC.

The digital dirham is expected to bring numerous benefits to the UAE’s economy and financial system. One key advantage is the increased efficiency and speed of domestic and cross-border payments, which will enhance the country’s competitiveness in the global marketplace. The digital dirham is also expected to boost financial inclusion by providing greater access to financial services for underserved populations, such as low-income individuals and small businesses.

Moreover, the digital dirham is expected to reduce the cost and complexity of financial transactions, thereby promoting innovation and entrepreneurship in the UAE. The digital dirham’s transparency and security features will also help combat financial crime and money laundering, which are key priorities for the UAE’s government and financial regulators.

The CBUAE’s partnership with G42 Cloud and R3 is a significant step forward in the development of the digital dirham. G42 Cloud is a leading provider of cloud and artificial intelligence (AI) services in the UAE, while R3 is a global blockchain software firm. The collaboration between the three entities is expected to leverage their respective expertise and technologies to ensure the successful implementation of the digital dirham.

In conclusion, the UAE’s central bank is making significant progress towards the launch of its digital dirham CBDC. The implementation of the digital dirham is expected to bring numerous benefits to the UAE’s economy and financial system, including increased efficiency, financial inclusion, and innovation. The CBUAE’s partnership with G42 Cloud and R3 is expected to be a key driver of the digital dirham’s success, and the future looks promising for the UAE’s digital currency.

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UAE’s Ras Al Khaimah to Launch Free Zone for Virtual Asset Companies

by Blockchain News

Ras Al Khaimah, one of the UAE’s seven Emirates, is set to launch a free zone dedicated to digital and virtual asset companies. The new free zone, RAK Digital Assets Oasis (RAK DAO), aims to create a hub for non-regulated activities in the virtual assets sector. This move comes as the UAE continues to attract global players in the crypto industry, positioning itself as a forward-thinking hub for crypto firms.

RAK DAO will provide a dedicated space for digital and virtual asset service providers operating in emerging technologies, such as the metaverse, blockchain, utility tokens, virtual asset wallets, nonfungible tokens (NFTs), decentralized autonomous organizations (DAOs), decentralized applications (DApps), and other Web3-related businesses. The free zone is expected to start with non-financial activities before introducing financial activities at a later stage.

Entrepreneurs looking to launch a crypto exchange may have to wait as this is an ESCA-regulated financial activity. The Securities and Commodities Authority (SCA) is one of the UAE’s main financial regulators, and it has authority throughout the Emirates, except for the financial free zones such as the Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC).

The new free zone will add to the more than 40 multidisciplinary free zones in the country that have already attracted numerous crypto, blockchain, and Web3 firms. These include the Dubai Multi Commodities Centre (DMCC), DIFC, and the ADGM.

As part of the UAE’s efforts to create a friendlier regulatory environment for crypto firms, Dubai unveiled its virtual assets law in March 2022, along with the Virtual Asset Regulatory Authority. This was followed by the Financial Services Regulatory Authority’s guiding principles on regulating and overseeing the new asset class and its service providers in September 2022.

Sheikh Mohammed bin Humaid bin Abdullah Al Qasimi, the chairman of the RAK International Corporate Centre, the operator of the new free zone, expressed excitement about the project, saying, “We are building the free zone of the future for companies of the future. As the world’s first free zone solely dedicated to digital and virtual asset companies, we look forward to supporting the ambitions of entrepreneurs from around the world.”

The establishment of RAK DAO is a strategic move for the UAE as it seeks to cement its position as a global leader in the crypto industry. By creating a regulatory environment that is friendly to crypto firms, the UAE aims to attract more players in the industry and foster innovation in the emerging technologies sector.

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CBUAE Plans to Launch Central Bank Digital Currency

by Blockchain News

As part of the first phase of its recently initiated financial infrastructure transformation (FIT) initiative, the Central Bank of the United Arab Emirates (CBUAE) has plans to introduce a central bank digital currency (CBDC) that will be valid for both international and local transactions.

The Central Bank of the United Arab Emirates (CBUAE) has recently made a statement in which it announced the FIT program and underlined its goal to assist the country’s financial services industry. The UAE’s Central Bank underlined the fact that the scheme will boost digital transactions and help the UAE to become more competitive as a financial and digital payment centre.

The issue of a CBDC is required in order to go on to the next level of the FIT program. The issuing of a CBDC would, in the words of the central bank, “address the difficulties and inefficiencies of cross-border payments and assist spur innovation for domestic payments, respectively.” The Governor of the CBUAE, Khaled Mohamed Balama, said that the FIT program would “help a flourishing UAE financial ecosystem and its future expansion.”

During the first stage of the program, in addition to a CBDC, the government intends to launch a unified card payment platform to “facilitate the growth of e-commerce” as well as an instant payments platform to “support financial inclusion and enable a cashless society.” Both of these platforms are intended to be implemented in order to “facilitate the growth of e-commerce.”

Included in the nine initiatives that make up the FIT program are the ones that will be put into action during the first stage. Following the first stage, other initiatives will be implemented, such as an e-Know Your Customer portal and an innovation centre.

The long-awaited “Full Market Product Regulations” were finally published on February 7 by the Virtual Asset Regulatory Authority (VARA) of Dubai. These regulations offer detailed instructions on virtual asset operations for projects that are operating inside the emirate. The restrictions include a prohibition on the issuance of “anonymity-enhanced cryptocurrencies,” which are also sometimes referred to as “privacy coins,” as well as actions that are similar.

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VARA Issues New Guidelines for Virtual Asset Service Providers in Dubai

by Blockchain News

Virtual Asset Regulatory Authority (VARA), the body in charge of supervising cryptocurrency regulations inside Dubai, has announced new rules for virtual asset service providers (VASPs) operating within the emirate. VASPs refers to companies that offer services related to virtual assets.

According to Irina Heaver, a crypto and blockchain lawyer based in the United Arab Emirates, VARA has issued its “Full Market Product Regulations.” These regulations include four mandatory rulebooks and activity-specific rulebooks that lay out the rules for operating VASPs. Irina Heaver is quoted as saying that VARA has issued its “Full Market Product Regulations.” Only market players located inside Dubai are subject to the laws; those operating within the Dubai International Financial Centre (DIFC), which is a free zone with its own independent regulatory agency, are excluded.

Additionally, the Dubai regulator emphasized that all market players, regardless of whether or not they are licensed by VARA, are required to comply to legislation regarding marketing, advertising, and promotion restrictions. Infringers will get a fee that ranges from 20,000 to 200,000 dirhams ($5,500 to $55,000), while repeat offenders face the possibility of penalties reaching as high as 500,000 dirhams ($135,000).

In addition, the rules provide direction on a variety of other topics, such as the distribution of virtual assets. According to Heaver, the most important points from the latest update from VARA are that it is illegal to issue privacy coins in Dubai and that traders whose trading capital is more than $250 million are obliged to register with VARA. Other key takeaways include the following:

In addition, costs for advising services, licensing, and yearly monitoring of custody, exchanges, broker-dealers, and loan services are established by the law. The costs might vary anywhere from 40,000 to 200,000 dirhams ($11,000 to $55,000), and they are expressed in the former currency.

“Regulatory clarity is tremendously beneficial to the business community. Consumers, investors, and the Emirate of Dubai all stand to benefit from this development. The restrictions have been anticipated for a very long time and are generally well received.

Heaver added that despite the fact that VARA has a broad authority to interpret the regulations and apply them in the way it sees fit, she believes and trusts that such interpretation and application will be done in line with “the spirit of Dubai’s leadership,” which takes into consideration business acumen and encouraging entrepreneurial endeavors.

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The UAE’s Minister of State for Foreign Trade Thani Al-Zeyoudi

by Blockchain News

Thani Al-Zeyoudi, the minister of state for international trade of the United Arab Emirates, has predicted that cryptocurrency would play a “significant role” in the country’s participation in global commerce in the future.

Al-Zeyoudi provided a number of updates regarding the United Arab Emirates’ trade partnerships and policies heading into 2023 during an interview with Bloomberg that took place on January 20 in Davos, Switzerland, which is the location where world leaders are currently gathered for the 2023 World Economic Forum.

In his remarks pertaining to the cryptocurrency industry, the minister claimed that “crypto will play a big role for UAE commerce moving ahead,” and he went on to emphasise that “the most important thing is that we establish global regulation when it comes to cryptocurrencies and crypto enterprises.”

Al-Zeyoudi went on to suggest that as the UAE works on its crypto regulatory regime, the focus will be on making the Gulf country a hub with crypto-friendly policies that also have sufficient protections in place: “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 is needed.” [Translation:] “We started attracting some of the companies to the country with the aim that we’ll build together the right governance and legal system,

Al-remarks Zeyoudi’s come less than a week after the UAE Cabinet adopted a new regulation, which, in essence, ensures that entities engaging in crypto activities must secure a licence and approval from the Virtual Asset Regulatory Authority. Al-remarks Zeyoudi’s come as a result of recent developments in the cryptocurrency market (VARA).

Under the terms of the new legislation, businesses who fail to comply risk incurring penalties of up to $2.7 million.

This action adds to the “Guiding Principles” for the regulation and supervision of digital assets that were released in September by the financial regulator of Abu Dhabi’s Global Market free economic zone.

The principles lay forth a welcoming attitude toward cryptocurrencies while also making a commitment to comply with international norms on anti-money laundering (AML), countering the funding of terrorism (CFT), and supporting financial sanctions.

In addition, Omar Sultan Al Olama, Minister of State for Artificial Intelligence and the Digital Economy of the United Arab Emirates, participated in a panel discussion at the World Economic Forum on January 19 that was centred on cryptocurrency.

Al Olama made the point that while the FTX scandal was a significant cause for worry, the United Arab Emirates (UAE) still intends to operate as a hub despite all that has transpired.

According to him, the fact that crypto firms choose the UAE to be their home is unquestionably a good thing.

The minister also distanced the United Arab Emirates from accusations that its towns, like as Dubai, tend to become major sites for discredited crypto personalities to run to. He said that “bad actors don’t have a country and don’t have a destination.”

However, he did emphasise that governments do need to collaborate in order to prevent bad actors from fleeing the country and going on the run internationally.

“They are there in every single place.

You will see them in the Bahamas, you will see them in New York, and you will see them in London. What we need to do as governments is work together, and we need to work with the industry as well, to ensure that if someone does something wrong, he can’t move from one place to the other, and you will see them there “he said.

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UAE’s Central Bank Completes Wholesale CBDC Pilot Program

by Blockchain News

The Central Bank of the United Arab Emirates (CBUAE) said on Wednesday that it has completed the first and the largest wholesale pilot of central bank digital currencies (CBDC) transactions.

CBUAE said it conducted the six-week pilot project through participation with other regulators, including the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, and the Bank for International Settlements.

The UAE’s central bank said the pilot test took place on the “project mBridge”, which is a custom-developed distributed ledger technology (DLT) platform developed by the above five regulators (i.e., CBUAE, the Hong Kong Monetary Authority, the Bank of Thailand, the Digital Currency Institute of the People’s Bank of China, and the Bank for International Settlements).

Throughout the pilot project, 20 commercial banks in the four jurisdictions used the “mBridge” platform to settle different kinds of payments for corporate customers, focusing on cross-border trade. The commercial banks conducted over 160 cross-border payments and FX (foreign exchange) transactions totalling over Dh80 million ($21.78 million) over six weeks, the report said.

The development marks the first pilot use of wholesale CBDCs in the MENA region under the Project mBridge, as per the announcement.

Khaled Mohamed Balama, Governor of CBUAE, commented, “The mBridge reflects the leadership vision for the UAE to be one of the leaders in CBDC development and issuance and the preferred regional hub for advanced financial infrastructure, as well as for the CBUAE to be among the top central banks globally.”

The test comes as officials in the U.S. are expressing doubts about the country’s willingness to develop its own digital currency.

According to the latest statistics, 109 countries are taking initiatives to create a CBDC. 11 countries have fully launched a digital currency. 14 countries are in the pilot stage with their CBDCs and getting ready for the launch, one of which is the UAE.

Image source: Shutterstock

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