The United Arab Emirates is quickly becoming one of the global leaders in cryptocurrency adoption. While most of the world’s governments either completely ignore Bitcoin and other digital assets or even are hostile towards the development of blockchain-based technological solutions, the UAE crypto market has been blooming for the past few years due to UAE’s highly welcoming climate for innovation.
Now that the global popularity of digital currencies is at a historically unprecedented level, both citizens of the United Arab Emirates as well as the people traveling to cities like Dubai and Abu Dhabi for business and leisure are becoming increasingly interested in the UAE Bitcoin & crypto ecosystem. From this guide you will be able to learn all the most important facts about the Emirati approach to blockchain technology and the UAE crypto market.
The UAE Crypto Ecosystem in 2021
Over the past few years, the Middle East has become one of the main global hubs of cryptocurrency adoption. Within the region, the United Arab Emirates leads the way as the undisputed pioneer in not only allowing, but also actively supporting the development of blockchain-based technological solutions.
The key factor in the fast rate of blockchain adoption in the United Arab Emirates is an excellent information infrastructure in the country. When it comes to the global rankings of high tech infrastructure, the UAE regularly ranks in the top 20, and in recent years even surpasses countries like Germany and Canada.
There’s a popular misconception which claims that the Emirati economy is built exclusively on the oil industry. This couldn’t be further from the truth. In fact, in cities like Dubai, only 1% of the GDP is attributed to the oil industry. The most important sectors of the city’s economy are technology, finance and banking, with global tech leaders like IBM and Microsoft featuring prominently in the UAE economic ecosystem. It’s no wonder that the Dubai Bitcoin adoption rate was so rapid, and that the Dubai crypto market is one of the most vigorously expanding in the world.
The superb information and high tech infrastructure in the United Arab Emirates wasn’t the only reason for the fast expansion of the UAE crypto ecosystem. Another factor which greatly contributed to the United Arab Emirates becoming the local leader in blockchain adoption has been the Emirati leadership’s encouraging approach to crypto innovation.
Are Cryptocurrencies Legal in the UAE?
Cryptocurrencies are legal in the United Arab Emirates, and the general climate surrounding the UAE Bitcoin and crypto market is very welcoming. Neither the UAE citizens nor people traveling to cities like Dubai or Abu Dhabi should expect any problems with buying, selling or storing cryptocurrencies.
It’s worth nothing that although owning and trading cryptocurrency is legal, digital assets like Bitcoin are not legally considered a currency. According to the Emirati law, the only legal form of tender accepted in the United Arab Emirates is the UAE Dirham (AED). The situation isn’t really much different than in most of the countries in the world as of now – Bitcoin and other digital assets are legal to own, buy and sell, but they aren’t really legally recognized as proper currencies similar to dollar or euro.
Buying, selling and storing digital assets in the UAE crypto ecosystem doesn’t require any special precautions on the part of retail investors. However, blockchain-related businesses which want to legally operate in the United Arab Emirates have to undergo a proper process of registration first.
Operating a UAE crypto business requires obtaining a special cryptocurrency license. Since the government’s overall approach to digital assets is very welcoming, the process of acquiring the license isn’t problematic. Businesses simply need to file an application and comply with the global cryptocurrency standards.
UAE Crypto Taxation Policy
The UAE crypto market is highly attractive for blockchain enthusiasts partially due to a very investor-friendly taxation system. Although the UAE government is working on introducing a more in-depth crypto regulations and some digital assets may be subjected to taxes in the future, currently neither businesses or individuals have any reasons to worry about a tax system unfriendly to crypto investors.
When it comes to entrepreneurs, the current regulation is very welcoming to blockchain-related businesses. There are no income taxes for the UAE crypto projects, which is one of the crucial factors contributing to the fact that the United Arab Emirates has become the local leader in blockchain-based innovation.
The situation is similar when it comes to individuals who simply want to buy, sell, trade or store cryptocurrencies. There are no crypto taxes so you don’t have to worry about the government wanting to take a portion of your bitcoins away from you. Furthermore, employees can receive a part of their salary in cryptocurrencies also subjected to a zero percent tax rate.
Where to Buy and Sell Crypto in the UAE?
Since the United Arab Emirates is so welcoming to new technologies in general and blockchain specifically, there are many ways for people to trade crypto and buying or selling digital assets in the UAE shouldn’t be a problem. A convenient method of purchasing cryptocurrencies in the UAE is using one of the local crypto exchanges.
One of the most popular UAE crypto exchanges is Palmex. The exchange was founded in 2018 and is headquartered in Dubai, being one of the leaders of the Dubai crypto market. Palmex is very attractive to blockchain enthusiasts due to its high level of security and very low trading fees. However, the exchange currently doesn’t accept fiat deposits, so opening an account requires you to already own Bitcoin or any of the other accepted cryptocurrencies.
Another very popular UAE Bitcoin and crypto exchange is BitOasis. The exchange was established in 2015 and just like Palmex it is also based in Dubai. As one of the pioneers of the UAE crypto market, BitOasis has quickly gained a considerable renown and is now a market leader in the entire Middle East. Aside from the UAE, the exchange also operates in countries such as Bahrain, Saudi Arabia, Qatar, Oman and Kuwait.
BitOasis is one of the leaders of the UAE Bitcoin and crypto ecosystem because it allows for easy and effortless purchases of cryptocurrencies with fiat. Users of BitOasis can trade dirham for Bitcoin (AED/BTC), but the exchange also accepts other fiat currencies such as the US dollar. Another convenient feature of BitOasis is the support of local credit and debit cards.
If you are not a permanent resident of the UAE but only visit cities like Dubai or Abu Dhabi for business or leisure, you don’t have to worry about having to register an account with a local exchange such as BitOasis or Palmex. Most of the popular international crypto exchanges like Binance or Kraken operate in the UAE, so you can simply continue using your preferred exchange while traveling in the United Arab Emirates.
One of the main differences between the UAE crypto ecosystem and the Bitcoin market in other countries is the fact that Bitcoin ATMs are not popular in the United Arab Emirates. Since Bitcoin ATMs do not comply with the UAE crypto regulations regarding KYC/AML laws, you are unlikely to find one in Dubai or Abu Dhabi.
Homegrown UAE Crypto Brands
A big advantage of the UAE crypto market over the blockchain ecosystems in other countries is the fact that the government actively supports the development of cryptocurrency projects and even considers blockchain one of the core sectors of technological infrastructure. While the cryptocurrency market in most countries is dominated by small startups ignored by the local governments, the UAE crypto projects can enjoy the support of the Emirati leadership.
Because of the welcoming attitude towards cryptocurrencies, leaders of the financial sector in the United Arab Emirates can invest in blockchain technology without any problems. An example of a company which successfully expanded from traditional finances to blockchain is the Al Hilal Bank headquartered in Abu Dhabi. The bank employed blockchain technology to issue $500 million worth of bonds compliant with Islamic law, making it one of the first Middle Eastern financial institutions to combine cryptocurrency and the traditional banking system.
Another major Emirati firm to successfully enter the blockchain ecosystem is the Abu Dhabi National Oil Company (ADNOC). ADNOC, which is the leader of the oil sector in the United Arab Emirates, has partnered with the tech giant IBM in order to collaborate on employing blockchain technology in its operations.
When it comes to companies specializing strictly in blockchain, one of the most interesting firms in the UAE crypto ecosystem is Emcredit. Emcredit is a long-time leader of the information sector in the United Arab Emirates, and is officially backed by the UAE government. In recent years, the company’s main focus has been blockchain technology. Emcredit has been working with international partners in order to develop the first official UAE crypto called emCash. In the future, emCash is expected to be the main digital currency powering the entire UAE blockchain ecosystem.
Another noteworthy UAE crypto project is Adab Solutions. The company is mostly known for the fact that it has launched the first fully Shariah-compliant digital assets exchange called FICE (First Islamic Crypto Exchange). Adab Solutions is one of the pioneers of the emerging trend in which the UAE Bitcoin and crypto companies aim to successfully combine blockchain technology with traditional Islamic banking.
One of the most interesting and unique UAE crypto projects is the company OneGram headquartered in Dubai. The firm is developing one of the first gold-backed digital currencies in the world, which is also officially certified as being fully Shariah-compliant. The fact that OneGram’s cryptocurrency is backed by actual reserves of physical gold makes it an attractive project not just for the UAE crypto enthusiasts but for blockchain investors around the world.
Look to the Future of the UAE Bitcoin and Crypto Ecosystem
The UAE crypto sector is expected to see a considerable growth in the foreseeable future. The main reason for this is the fact that the Emirati leadership considers blockchain technology to be one of the strategic sectors of the information infrastructure, and blockchain-based projects can count on active support of the UAE government. The United Arab Emirates is currently one of the few countries in the world which understands blockchain to be an integral part of the modernization and development of the financial, banking and government sectors in the near future.
The UAE crypto market is already a billion dollar sector, with Emirati blockchain-based startups regularly being able to raise hundreds of millions dollars worth of funds every year. The United Arab Emirates is currently one of the world’s leading countries when it comes to digital asset sales, with the popularity of cryptocurrencies expected to grow even more in the near future.
The long-term crypto strategy of the UAE leadership is based on the document entitled “The Emirates Blockchain Strategy” published in 2018. The plan described in the paper aims to radically modernize the government sector of the United Arab Emirates by fully embracing blockchain technology. According to the document, the UAE government plans to move at least 50% of all government transactions on the blockchain, thus making government-made financial operations more transparent and secure.
The United Arab Emirates is one of the few places in the world where the government actively helps blockchain-based startups. Thanks to that, the UAE crypto sector is blooming, and the country has already become the undisputed leader of blockchain innovation in the entire Middle East. Since this course is expected to continue in the foreseeable future, the UAE might become not only a local, but also a global leader in cryptocurrency adoption.