Opening a crypto company in Dubai

Introduction

Dubai and the United Arab Emirates, had an impressive growth in these last decades becoming attractive for tourists, businesses, talents and innovators.

The area is now one of the top global financial hubs and is now expanding the activities also in the crypto space with new friendly regulations that can attract also crypto companies and investors.

Dubai

Dubai was not spoken of as a real city until 1833. At that time, one of the main products that made Dubai famous were pearls and the related commercial activities.

In the 1960s the discovery of oil changed the landscape and the outlook. 

The 1980s were characterised by an urban boom; in 1990, the city reached 550,000 inhabitants.

In 1990, increasingly ambitious projects were launched that led to the creation of the city we know today.

Today Dubai is famous for its modernity, its extreme engineering works, as a place for holidays but also as a place of business. With its location at the junction of East and West, Dubai is a futuristic and thriving hub for global trade.

Dubai’s economy is only 1% dependent on oil, today. Trade and services, including tourism, are the basis of its current economy.

A financial hub

In the last decades, Dubai has become the leading financial centre in the Middle East, Africa and South Asia (MEASA) region with solid infrastructure and a regulatory environment that allows businesses to start up and grow.

It is currently ranked among the top ten global financial centres, thanks to the strategic geographical location that allows to serve the burgeoning economies of the MEASA region, where 3 billion residents can take advantage of the wide range of financial services, all in a highly regulated environment.

Dubai is today a global hub for business and investments.

Attracting investments and companies

The adoption of international best practices, the introduction of tax incentives and the strong regulatory framework have made Dubai a popular destination for start-ups and multinationals.

In June 2021, the UAE passed a law on foreign ownership of companies, which allows foreign investors to hold 100 per cent of shares in UAE-registered companies (which previously could only be done in free trade zones).

– Free Zones

Established in 1985, the free trade zones in the seven United Arab Emirates were created to facilitate foreign investment and avoid paying taxes.

In fact, their operation has never changed over time and they have always aimed at attracting excellence from all over the world, not only in terms of brand, but also in terms of know-how and mindset in all sectors, and give these users significant advantages.

In addition to the taxation benefits of no corporate, personal, VAT or import-export taxes, the Free Zones offer a whole range of other benefits such as low energy and utility costs in general as well as human resources, the possibility of repatriating 100 per cent of profits, the possibility of hiring foreign staff, a streamlined bureaucracy, clear and precise costs, the possibility of applying for a Visa Resident and even a personal parking place.

For Instance, The Dubai International Free Zone (DIFC) offers a guarantee of zero taxation for 40 years on company revenues and profits, in addition to the UAE network of treaties signed with regulators and central banks to avoid double taxation. 

The Crypto sector

UAE have a relevant and emerging role also in the global crypto landscape. The UAE’s share in the global market is around US$25 billion transactions, and it has increased 500% between July 2020 and June 2021. 

It is reported that there are more than 400 crypto businesses currently in the UAE. 

The Dubai strategy is to become a leading center in the crypto sector. The basic assumption behind the strategy is that what has worked in the world of classical finance will most likely work for the world of crypto and decentralised finance as well: a finance made of a few clear rules. 

Friendly regulations

Dubai has issued a crypto regulation that encompasses the sector with the goal of “Establishing the position of the UAE and Dubai as a key player in shaping the future of virtual assets globally”.

Dubai has also established On 28 February 2022 a regulatory authority with virtually full powers and the goal to make Dubai a leader in the industry. 

The authority is the Dubai Virtual Assets Regulatory Authority (VARA). VARA is an independent regulator, tasked with the regulation, governance, and licensing of cryptocurrencies, Non Fungible Tokens (NFTs) and other virtual assets in Dubai. 

Activities subject to authorisation from VARA include operating and managing Virtual Assets platform services; exchange services between virtual assets and currencies, whether national or foreign; exchange services between one or more forms of virtual assets; virtual asset transfer services; custody and management services; and services related to the offering and trading of virtual tokens. 

During 2022, VARA has started issuing licences that allow companies of the crypto and digital assets world to operate in the country – and to make it their headquarters as well. This includes brokers and operators of crypto projects, including those related to the metaverse on chains and the gaming world.

Crypto Centre

In order to attract and foster the growth of crypto businesses, the Dubai Multi Commodities Centre (DMCC) (https://www.dmcc.ae ) had opened already in 2021 a new Crypto Centre to companies developing various crypto and blockchain technologies.

The DMCC Crypto Centre houses companies offering, issuing, listing, and trading crypto assets, as well as those developing blockchain trading platforms, fully supported by the national government. 

The DMCC web site provides information on the procedure to set up a company at their premises.

The Dubai developing crypto market has raised international interest, as shown by the entry of global players such as Binance, Kraken, Bybit, FTX and other international companies.

Ahmed bin Sulayem, Executive Chairman and CEO of the DMCC, is confident that there will be over 1,000 crypto businesses in the UAE by the end of 2022.

Conclusions

The stable political organization with very low taxes and much greater freedom to do business has allowed Dubai to become a global financial hub . This has also attracted already established businesses, which have relocated their headquarters.

The new crypto friendly regulatory landscape and infrastructure have been established to support the strategy aimed at making Dubai a key player in shaping the future of virtual assets globally.

The effect of such moves is that more and more crypto projects are moving their headquarters to Dubai.

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