UAE reaps rewards of recognising blockchain’s disruptive potential early on
It is becoming increasingly apparent that the UAE’s early promotion of blockchain’s disruptive potential is paying off.
Over the past year, the world has become increasingly open-minded with respect to digital assets and cryptocurrencies. This has been demonstrated by growing acceptance and wider mainstream adoption of cryptocurrencies, not only at the retail level but at the institutional level as well.
As always with progress, there are many sceptics. However, even the most stubborn of these would have had to question their position after US President Joe Biden’s March 9 executive order that addresses the need for a framework to encourage the development of cryptocurrencies in the US.
With the White House noting that there are about 40 million Americans trading and investing in cryptocurrencies, it is increasingly apparent that the US does not wish to be left further behind by international competition, such as the UAE, that already has a significant head start.
As part of the initiatives to diversify the economy, the UAE recognised early on the disruptive potential of blockchain. While others hesitated, the country’s leadership and regulators took steps to develop a centre to support growth and innovation in the industry.
Through a combination of specific and precise regulations, government adoption of blockchain initiatives and sovereign wealth fund investments, the foundation for a solid ecosystem was created and growth was nurtured.
The initial results were manifest in launch of several local home-grown companies with significant potential.
However, this is not the only measure of the UAE’s success in the industry. It is also demonstrated by the fact that many large international companies and established industry stakeholders have chosen to set up their headquarters in the Emirates. These industry leaders have been attracted by a supportive ecosystem.
One such entity is cryptocurrency exchange Binance, which recently received licences to begin operating in Dubai and
Abu Dhabi. I recently caught up with Zhao Changpeng, chief executive and founder of Binance, to talk about the company’s specific initiatives in the region, as well as the broader themes in the blockchain and cryptocurrency landscape. The UAE and the Mena region have young populations with increasing digital literacy levels, which encouraged Binance to put a strategy in place to capitalise on this potential.
For example, through the Binance Labs incubation programme, it is looking for early stage projects from around the world. Binance organises meetings between founders, helps them to set up connections and also provides UAE-based entrepreneurs with necessary funding, advice and resources to take their projects to the next level, says Mr Zhao.
The company also developed its own blockchain called the BNB Chain. The main advantages of BNB Chain are low transaction fees, ease of use and low barriers to entry, while cryptocurrency regulation is essential for the industry’s healthy growth, he says.
The cryptocurrency and blockchain industry is also promising to revolutionise the employment sector, with many enthusiasts predicting that the role of smart contract engineer will become a staple job at most companies.
As more brands are involved in Web3, there will be a need for people who understand and can design the systems that enable it, Mr Zhao says. People who have a coding background will have an advantage but the key thing will be to understand how blockchain and cryptocurrency work at a fundamental level, he says.
These are sentiments that the UAE appears to have embraced, allowing it to take the lead globally when it comes to promoting blockchain’s disruptive potential.
Many companies in the blockchain sector have set up base in the UAE after being attracted by its supportive environment