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Dubai Looks Forward to Harnessing the Tide towards Crypto by Licensing Businesses at the DMCC

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Staff Writer, TLR

Published on July 14, 2023, 17:40:59

48

CRYPTO, BUSINESS, DMCC

DMCC seeks to build confidence, trust and security in Crypto transactions, such that risks are mitigated and illegal activities are prevented as far as possible

The global hype on crypto currency is on the rise, with prominent individuals such as Elon Musk bolstering the tide towards decentralized currency. However, the trend is getting the attention of regulators and governments, who either wish to harness the potential or curtail the use of crypto currency altogether. Dubai, however, seems to move in the former direction, aspiring to be the epicenter of safe crypto investments.

How the Trend Has Taken Shape

While critics of decentralized currency include prominent figures such as Warren Buffet, who calls it "a delusion", the hype over crypto currency does not seem to stop. The feature that distinguishes crypto currency is the lack of control by any government or regulator. Furthermore, unlike conventional currencies, these are not pegged against any material assets such as Gold. Crypto currency works as peer-to-peer electronic cash, which can either be bought or mined by solving a cryptographic puzzle which results in coins being rewarded in return. While, this is an open source software solution, encryption is used to keep it safe, where private keys attached to individual users can be used to encrypt and decrypt the coin transacted. It is also observed that crypto currency may be capable of getting around fluctuations caused by inflation. However, these distinctive features might as well play out as serious risks owing to lack of redressal mechanisms, potential for hacking or potential for use by criminals. Hence, it is imperative on governments and regulators to put adequate checks and balances.

DMCC's Move to Bolster Crypto Currency Transactions

The Dubai Multi Commodities Centre is looking forward to becoming a hub of crypto currency transactions. The idea is to build an equipped tech valley called DMCC Crypto Centre to be prepared for the influx of crypto business, such that there is availability of knowledge and technological applications required, opines Ahmed Sultan Bin Sulayem, CEO of DMCC. This move seeks to provide a safer space for crypto business, which builds confidence, trust and security. Ahmed also opines that with an agreement with the SCA in place, the DMCC is looking forward to expanding the present range of crypto-assets licenses Businesses dealing with crypto assets can now get licenses in DMCC Crypto Valley, Dubai.

The MoU with SCA: Preparing for the Crypto Tide

This new shift is a result of a Memorandum of Understanding signed by DMCC freezone and Government of Dubai Authority on commodities, trade and enterprises  with the Securities and Commodities Authority for establishing a regulatory framework for businesses offering, issuing, listing and trading crypto assets in Dubai Multi Commodities Centre. The DMCC provides a strong business regulatory framework, first-class customer service and a range of initiatives. The SCA will work with the DMCC to issue approvals for businesses described above.

Subsequently, the crypto activities shall be regulated by the SCA, being in line with the policies which were introduced in October 2020. The policies were introduced to develop an integrated ecosystem for the crypto and block-chain industries. This agreement is anticipated to foster growth with the said sectors and promoting block-chain application development in Dubai. Dubai seeks to be prepared with the necessary infrastructure, technology and a conducive regulatory framework to partner with crypto businesses in a safe and effective way. Long story short, the agreement is expected to set the course for crypto businesses to develop in Dubai and assist in bringing a safer system for the mode of currency which seeks to defy systemic currency set-ups.

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