Crypto Lists confirms that the United Arab Emirates has awarded the Kraken crypto exchange a license to operate in the country. Kraken is expected to set up an office in Abu Dhabi. This will make the crypto exchange the first exchange to offer the United Arab Emirates (UAE) Dirham for trading. It aims to provide accessibility of global liquidity to the country’s investors through multiple Dirham trading pairs.
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FTX, Binance and Crypto.com was already present in UAE before Kraken. Kraken will therefore be the forth virtual asset exchange to receive approval by the regulatory authorities to operate in the Abu Dhabi International Finance Center and Free zone, Abu Dhabi Global Market. It is a move by the crypto exchange to expand into the Middle East. Abu Dhabi is set to be its regional headquarters.
In an interview with CNBC, Kraken’s managing director for Europe, the Middle East, and Africa, Curtis Ting, announced his excitement about the exchange joining Abu Dhabi Global Market (ADGM). He highlighted that the region finally offers Dirham trading pairs to its investors. However, Crypto Lists expects that most of the major crypto investors in UAE don’t care about dirham trading and rather use cryptocurrencies for deposits, or one of the two major currencies – Euro and USD. Many Europeans that sold off their company move to Dubai and Abu Dhabi.
Direct funding and trading of Dirham is against Bitcoin, Ether, and other virtual assets. Ting showcased how the region had been anticipating an exchange like Kraken into the market. Dhaher Bin, CEO of the International Financial Center registration authority, insisted that Kraken’s inclusion in the UAE assists in financial diversification and economic diversification in Abu Dhabi.
Background about Kraken
Kraken was established in 2011 and currently operates in at least sixty countries. The expansion into the UAE market is a significant milestone for the exchange. The Middle East Region is a lucrative cryptocurrency region. There is fast growth in the cryptocurrency market. According to Chainanalyis, it contributes to 7% of the global trading volumes. The UAE, in particular, has annual transactions of about twenty-five billion USD of cryptocurrency. The country ranks third behind Lebanon and Turkey in trading volume. Lebanon trades $26 billion while Turkey trades $132.4 billion.
UAE has witnessed an influx of entrepreneurs, operators, and developers due to the clarity of regulations provided by the ADGM and the federal level. It is developing into a crypto hub and web 3.0 hub. Several businesses have integrated cryptocurrencies into their operations. The country has attracted an array of talent during the 24 months upon the onset of COVID.
Increased Competition in the UAE
The largest crypto exchange by trading volume had already established operations in Abu Dhabi some weeks ago. Binance targets over 10 positions in the UAE. They aim for a more significant presence in the Middle East. Bybit received approval to set up in Abu Dhabi in the previous month. Furthermore, UAE awarded FTX a virtual asset license as it looks to set up its office headquarters soon.
UAE is not the only financial center seeking to attract investments and trading volumes. Other rival financial centers, including Singapore and Hong Kong, plan to develop regulated environments to encourage crypto trading. Its pursuit to deepen the regulatory mechanism.
UAE listing as a Gray List country
As the UAE attracts major crypto exchanges, it has been under increased scrutiny from international observers. There are claims that the country is doing little to crack down on fraud and money laundering schemes. Reports indicate claims of requests to crypto firms to liquidate billions of dollars of virtual currency. It claims Russians have been using Dubai’s property market amid the war in Ukraine.
The anti-money laundering watchdog, the Financial Action Task Force provides the UAE as a gray list country. It means they require additional monitoring of their financial activities. The Middle East country joins Turkey, Panama, and Syria.
Kraken’s Managing Director of MENA, Curtis Ting, indicated that the exchange is aware of anti-money laundering. They are keen on the Know-Your-Customer and other compliance matters. He mentions that it increases accountability with the regulators.
The introduction of ADGM’s virtual asset framework in 2018 established itself as a leading global hub. It provides a business platform for the country’s local, regional and international organizations. The country’s primary hub, Dubai, is gaining several crypto firms. It issued its Virtual Asset Regulatory Authority as a watchdog the previous month.
Crypto Lists view Israel as the main competitor of the UAE in becoming the Middle East crypto center. Kraken is a welcome exchange to UAE as the country continues its crypto push. The global exchange satisfies all conditions of the Financial Services Regulatory Authority (FSRA) of ADGM. Several exchanges will likely follow suit in this crypto hub.