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ADOPTION OF CRYPTOCURRENCY IN THE UAE

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ADOPTION OF CRYPTOCURRENCY IN THE UAE

Cryptocurrency has taken the financial industry by storm and has affected how people conduct

financial transactions. It; is a method of online payment which is decentralized and is free from

central regulation. It; is enabled by blockchain technology where independent users verify the

authenticity of the transaction, and a record of each transaction is stored in the database of each

active user (Hileman & Rauchs, 2017). As; the crypto assets are multiplying their network

throughout the world, the United Arab Emirates is starting to feel the winds of the financial

revolution. The; UAE market is essentially dominated by Islamic finance, where gold remains

the ultimate equivalent of the currency notes, and interest is substituted by the concept of profit

and loss sharing. It; has been documented in history that the Arab world resisted the substitution

of the gold standards with currency notes. Now the transition from currency notes to digital

currency is a step too fast. However; the demographic of the gulf country has changed drastically

over the years, with expatriates leading the economic and financial development of the country.

With; many expatriates in high positions in the UAE, the acceptance of cryptocurrency is high,

and the transition has become more accessible.

UAE has remained on the frontlines of the technological revolution by embracing innovation

which transformed the gulf country into a global economic leader. The; policymakers of the

UAE have taken the lead in the adoption of the cryptocurrency by issuing regulatory guidance on

the creation, issuance, and marketing of cryptocurrencies which has ensured a controlled

transition to digital currency. These; rules protect the local and foreign investors by announcing

punitive measures against crypto scammers that have improved the confidence of investors and
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declared the crypto platform as a safe and regulated payment method (Parashar, 2021). The;

UAE regulators are not only hunting down the scammers but are also facilitating the crypto

enthusiasts by issuing trade licenses for crypto assets and allocating digital wallets to licensed

investors to secure their confidence in the market. The; local authorities are investing heavily to

develop the crypto infrastructure by creating new blockchain applications and rolling it out to

industries for early adoption and testing of its effectiveness. The; UAE is importing skilled

professionals from around the world in an attempt to develop a firm knowledge bank that can

help drive the adoption of crypto platforms at a national level in the UAE (Abdeldayem, 2020).

The; Securities and Commodities Authority in the UAE has allowed the free trade zones to make

payments in cryptocurrency and has assured ease in the issuance of licenses for businesses

inclined towards adopting crypto as their method of payment (Sayed, 2018). Many; virtual assets

trading platforms, such as MidChains in Abu Dhabi, are now recognized as authorized crypto

traders by the Financial Service Regulatory Authority, giving legitimacy to the future of crypto

in the region.

Conclusion

The steps taken by the regulators in the UAE not only demonstrate a keen interest in adopting

crypto but indicates a healthy trend of persisting with the digital platform in the long run. The;

ease with which the industries are using the crypto platform to make payments suggest that they

are not only willing to use it as a payment method but are exploring the enabling technology of

blockchain, the adoption of which they believe can streamline their operations and reduce costs.

Based on the historical trend in the gulf society, it is expected that cryptocurrencies and

blockchain will become a part of the regular lives of the people shortly.
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References

Abdeldayem, M. M. (2020, February 2). Cryptocurrency In The Gcc Economy. Retrieved

January 29, 2022, from
https://www.researchgate.net/profile/Saeed-Aldulaimi/publication/342411659_Cryptocurrency_I
n_The_Gcc_Economy/links/5ef31ccca6fdcc158d26102e/Cryptocurrency-In-The-Gcc-
Economy.pdf

Hileman, G., & Rauchs, M. (2017). Global Crypto Currency Benchmarking Study. Retrieved
January 29, 2022, from https://www.crowdfundinsider.com/wp-content/uploads/2017/04/Global-
Cryptocurrency-Benchmarking-Study.pdf

Parashar, R. (2021, December 28). Crypto Scammers Will Get Up to Five Years of Jail, Fine of
AED 1 Million Under New UAE Regulations. Retrieved January 29, 2022, from
https://gadgets.ndtv.com/cryptocurrency/news/crypto-scammers-uae-new-regulations-law-
punishment-5-years-prison-fine-jail-2675539#:~:text=New%20rules%20are%20being
%20passed,2%20crore).

Sayed, M. N. (2018). Impact of Crypto-currency on Emerging Market Focus on Gulf countries.

Retrieved January 29, 2022, from
https://www.researchgate.net/profile/Mohamed-Sayed-22/publication/
331940295_Mohamed_Noureldin_Sayed_and_Nesrin_Ahmed_Abbas_Impact_of_Crypto-
currency_on_Emerging_Market_Focus_on_Gulf_countries/links/5c94112ba6fdccd460311171/
Mohamed-Noureldin-Sayed-and-Nesr