According to Henley & Partners Crypto Wealth report 2023, in terms of crypto adoption the UAE comes in third globally after Singapore and Switzerland, scoring more than Hong Kong and USA.
As per the report the UAE’s public adoption score was 7.1 out of 10, equal to that of Singapore which topped the list. In the report methodology, public adoption measures the level of awareness, interest, and engagement with cryptocurrencies in the general population. It includes indicators such as the percentage of crypto users relative to the total population, Google search interest related to cryptocurrencies, and the number of institutions offering courses on blockchain and cryptocurrency.
The UAE was on par with Switzerland for innovation and technology, both scoring an 8.7 out of 10.
Interestingly, while the UAE has been moving strongly forward with its crypto regulation, its score is still much lower than Singapore and Switzerland. The UAE had a regulatory score of 5.6 out of 10, Singapore scored an 8.5, and Switzerland an 8.4.
The UAE government in early 2023 introduced federal legislation on virtual assets and virtual asset service providers under the regulatory eye of the UAE Securities and Commodities Authority. In addition, Dubai introduced VARA ( Virtual Asset Regulatory Authority), to oversee virtual asset service providers in the city becoming the first virtual asset regulator globally.
The UAE was also one of the first to introduce virtual asset regulation within Abu Dhabi through ADGM ( Abu Dhabi Global Market)
Despite this, the UAE’s regulatory environment is still novel when compared to Singapore and Switzerland. Henley & Partner’s methodology when assessing the regulatory environment looked at a country’s legal framework for cryptocurrencies and blockchain technology. Sub-parameters included the adoption of Initial Coin Offerings (ICOs) and the number of ICOs operated, anti-money laundering/combating the financing of terrorism (AML/CFT) regulations, the legal status of cryptocurrency, clarity of regulations, the development status of central-bank-backed digital currencies, and licensing requirements for crypto businesses.
Nevertheless, the UAE beat Hong Kong even though recently Hong Kong has embraced the cryptocurrency industry with a structured comprehensive regulatory framework through Hong Kong Securities and Futures Commission (SFC).
In terms of infrastructure adoption the UAE also scored low compared to Singapore, Swtizerland. The UAE had a score of 5.9 out of 10, while Singapore scored 6.4 and Switzerland 9.2. As per the report, infrastructure adoption relates to the presence of foundations for crypto transactions that include crypto exchanges, crypto ATMs, integration with local banks, the presence of digital asset exchanges, and the approximate number of products that can be purchased with Bitcoin.
Here the UAE truly does still lag behind, as there are still no fully operational licenses granted by VARA except for the license granted to Laser Digital Middle East FZE, the crypto arm of Japanese Nomura Holdings, a full crypto license allowing it offer virtual asset broker dealer and investment management services in the UAE.
In addition the Central Bank of UAE has yet to come out with its digital assets payment regulation that will easily allow integration of crypto with local banks, and there are hardly any crypto ATMs in the UAE.
The UAE however beat all with a score of 10 out of 10 when it came to crypto taxation, as crypto is not taxed in the UAE, while it is in Singapore and Switzerland.
Henley & Partners state, “The UAE stands out as a leading jurisdiction for crypto investors, with its strong public adoption score evidencing a vibrant interest in the crypto ecosystem. The Middle Eastern powerhouse also offers favorable tax policies and a high level of economic stability.”
So while the UAE might still lags in some areas, it is quickly moving towards leading the crypto scene globally.
The report claims that in a crypto market worth $1.18 billion there are currently 88,200 crypto millionaires globally, 182 centi-millionaires and 22 billionaires out of a total of 425 million crypto users.
