The United Arab Emirates is one of the first Arab and even global countries to pay great attention to the blockchain industry and include it in its general development plans.

For cryptocurrency start-ups seeking the stamp of legitimacy that comes with regulation, the UAE capital has become an ideal destination.

Tell Several crypto industry pioneers have stated that Abu Dhabi – specifically the Abu Dhabi Global Market (ADGM), the city’s international financial hub – has become an attractive jurisdiction for crypto companies large and small since it introduced digital asset regulation in June 2018.

Richard Teng, CEO of ADGM’s major markets watchdog, told Coindesk that the city of Abu Dhabi has received great interest from the crypto industry leaders about operating as a licensed company in the jurisdiction.

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It is said that there are as many as seven or eight companies working in the cryptocurrency space, and an equal number of companies, interested in moving to Abu Dhabi.

Some of these names include Kraken, which has already started the licensing process and is working with the FSRA to bring its offerings in line with local laws.

Dave Ripley, chief operating officer of Kraken, said that Abu Dhabi is attractive because it is a strong, growing, free market that is becoming more and more global.

The Huobi platform is also in the process of setting up an office in Abu Dhabi. Ciara Sun, head of global business for Huobi, stated that the company hopes that its new headquarters will serve as the regional base for the Middle East. Sun stated:

It’s a great market, and blockchain adoption is growing rapidly in the region.

Sun did not disclose the progress of Huobi’s legal actions in the region.

A person familiar with the matter said that the blockchain payments company Ripple is in an interview with the FSRA.

In short, ADGM’s Crypto Framework provides a complete list of standards and expectations for key components of the financial market, such as anti-money laundering, market integrity, customer protection, safe custody and governance models, for any company looking to work in the exchange, brokerage or custodian business.

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Although no business has been granted a full license yet, Christopher Flinus, co-founder of OTC crypto platform and crypto custody and storage company HAYVN, has received preliminary approval from the FSRA.

He told Christopher that HAYVN had looked into other jurisdictions but settled in Abu Dhabi because their regulations were much better than any other region.

Christopher added that while his company deals with institutional clients, many of whom have stringent due diligence requirements, a stronger regulatory vessel in Abu Dhabi is better for business.

All I care about is that the regulatory framework in which HAYVN operates is good enough that when I sit down with a UK pension fund and try to put a small percentage of their total portfolio into cryptocurrency, they appreciate HAYVN as regulated as if we were a financial institution.

There are other, more strategic reasons for moving to Abu Dhabi, as explained by Tim Aaron, director of DeversiFI and a lawyer in London, saying:

The system [التنظيمي] The entirety of Abu Dhabi has been largely lifted from the UK.

He added by clarifying that the CEO of “FSRA” in 2015, was director of corporate finance at the Monetary Authority of Singapore (MAS).

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As the FSRA hires many of its officials from financial regulators in other countries – such as the UK’s Financial Conduct Authority (FCA) – Aaron believes that Abu Dhabi’s regulations may be a precursor to future crypto systems in other countries.

Aaron said:

The language and legislation are almost the same, so anyone familiar with the regulation of the UK will simply find their way around the regulation of Abu Dhabi.

The reason we, and perhaps others, are thinking about this is because we’ve been watching for the possibility that there will be a move in the near future towards immediate regulation of the cryptocurrency market.

There are, of course, other jurisdictions that offer some kind of licensing framework for cryptocurrency such as Malta and Liechtenstein and offer crypto-regulations, with Singapore gradually integrating digital assets into its existing payments regulation…

But part of the attraction of Abu Dhabi, according to companies moving there, is that the area is almost like an exclusive club.

According to Teng, only 5% of initial applicant companies are invited to obtain an ADGM license, a process that can take up to 14 months.

Some of the companies seeking a license in Abu Dhabi, such as “Kraken” or “Huobi” are already global companies.

But many, like DeversiFI and HAYVN, are smaller and see that they have passed such rigorous scrutiny as a ticket to being able to offer their services in other jurisdictions.

HAYVN is setting up offices in London, Singapore and Zurich, as branches of the Abu Dhabi office.

Although there is no equivalent system with the UK, Aaron said that FSRA approval with the same standards and the right protections as the FCA will likely make UK authorities easier when it comes to regulating there.

Aaron continued:

Having a regulator that looks over your shoulder and basically gives a seal of approval generally gives clients more comfort.

ADGM licensing for companies is a much-needed reassurance.

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