Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
Driving commercial and political engagement between Asia, the Middle East and Europe
The Gulf is embracing digital assets and fintech
Digital assets and fintech are emerging as a new trend in Gulf-Asia trade dynamics, with economies across the Middle East launching new initiatives to develop fintech capacity. Dubai in particular has made concerted efforts in 2022 to become a global digital assets hub – with implications for Asian markets including Hong Kong and Singapore.
Asia House’s new research report, The Middle East Pivot to Asia 2022, explores this trend in detail, including the rise of fintech and digital assets across the Gulf.
A fast-growing industry
Financial technology (fintech) and digital assets are growing sectors in both the GCC and emerging Asia, with both regions attracting mutual investment. Gulf economies recognise the efficiency gains that fintech and digital payments can give to businesses and consumers, thereby driving economic growth, and have introduced several initiatives to develop the sector. The fintech industry is growing fast and according to UBS is expected to expand from US$150bn in 2018 to US$500bn in 2030 (Finextra, 2020).
Dubai aims to be global hub for digital assets
Dubai has made a concerted effort in 2022 to become a global digital assets hub. In March 2022, it established the Virtual Assets Regulatory Authority (VARA), the first of its kind globally. VARA is headed by the Director-General of Dubai’s Department for Economy and Tourism, highlighting the importance Dubai’s leadership has given to developing a digital assets sector. VARA will regulate cryptocurrencies and provide services including management, clearing, and settlement. The new body is encouraging crypto-firms to establish themselves in Dubai, including from Singapore and Hong Kong.
The most notable example is Binance, the world’s largest cryptocurrency exchange by trading volume. Binance’s Singapore entity withdrew its licence application with the Monetary Authority of Singapore (MAS) in December 2021, and the firm’s CEO, Changpeng Zhao has relocated from Singapore to Dubai. Binance has since obtained licences from Dubai (Binance, 2022a) and Bahrain (Binance, 2022b).
“There is also greater cooperation within the overall technology sphere, whether in terms of R&D in hydrocarbons or exploring other areas like e-commerce, fintech and payment services.”
Waleed Rasromani, Corporate M&A Partner, Dubai and Riyadh, Linklaters, spoke to Asia House as part of the research. Read the interview in full
Digital currencies
The UAE has also made moves towards the adoption of digital currencies, leading to cooperation with China. In February 2021, the UAE Central Bank joined a project involving the People’s Bank of China, the Bank of Thailand, and the Hong Kong Monetary Authority to explore the use of blockchain for regional payments (Crawley, 2021).
China’s digital currency development is advanced compared to other central bank pilot initiatives (Papadavid, 2021). The West has been slower to develop digital currencies, with some nations indicating they may not accept digital currency payments in the future, meaning the UAE could stand to gain by integrating itself with leading developers of this new global financial trend. As of June 2021, the UAE is the Middle East’s third-largest cryptocurrency market, following Turkey and Lebanon, with an exchange volume of around US$26bn (Anderrson, 2022), but is set to grow.
For more information about Asia House’s Middle East expertise and research services, and to enquire about bespoke presentations on the issues covered in the report, please contact Jonathan Smith, Corporate Affairs Manager: jonathan.smith@asiahouse.co.uk
