Blockchain and crypto enthusiasts will find in the UAE and Saudi two countries ready to pounce on, adapt to, adopt and pre-empt the revolutionary concepts behind these technologies.
Abu Dhabi Digital sandbox
Abu Dhabi Global Markets (ADGM), the emirate’s international financial center, has further underlined its fintech ambitions with the launch of a digital sandbox, reports Finextra, an industry site.
The initiative is designed to offer banks, fintechs, and regulators an open digital marketplace in which to collaborate on the creation, testing, and adoption of new products, according to ADGM.
“It is also aiming to promote local fintech firms to Abu Dhabi-based banks as well as attract international players to the emirate,” says Richard Teng, CEO of ADGM’s Financial Services Regulatory Authority.
In a busy week of fintech promotion, ADGM also signed a cooperation agreement with the government’s Department of Economic Development which it hopes will provide more integrated support for startups across a number of sectors including financial services, according to Finextra.
The competition to establish a fintech hub of choice in the Middle East has become increasingly intense between Dubai, Abu Dhabi, and Saudi.
In December 2017, the UAE and Saudi Arabia began a collaboration on a proposed cross-border cryptocurrency.
In February 2017, the UAE government also announced a partnership with IBM for a blockchain trade finance project.
Saudi Arabia’s National Commercial Bank (NCB) has signed up officially with RippleNet, starting up remittance payment corridors between the KSA and the US, and other potential Asian markets.
The agreement is a first between a Saudi bank and Ripple, following a February 2018 agreement with the Saudi Arabian Monetary Authority to develop an efficient pilot programme and sandbox for the KSA banks to effectively test out connections with Ripple for immediate settlement of all cross-border transfers, reports CoinIdol.
“The KSA is one of the biggest sources of remittances in the globe. As per the World Bank, $308 million US dollars were transacted into KSA, and $37 billion in remittances were transacted from the nation in the year 2016,” says Coinidol.
For NCB, the second-biggest financial institution in KSA, the connection to RippleNet will furnish it to associate with banks on this network, and start up other new markets in Asia and North America, starting Singapore.
Also recently, the Saudi Capital Market Authority issued its first fintech licenses to two local startups in a bid to kickstart its fintech sector and expects to receive more applications later in the year.
With blockchain growth comes crime
Several media reports pointed to Dubai Police currently investigating an $81.7 million international fraud case and warning about the potential role of digital assets in terms of facilitating crime in the UAE.
Speaking at a forum on September 16, police officials said unmonitored large-scale electronic financial transactions inevitably pose a substantial amount of risk, and the UAE government needs to develop a legal and law enforcement framework to deal with this threat.
Predicting the Rise of Electronic Money and a Possible UAE Cryptocurrency
Lt-Gen Dhahi Khalfan Tamim, deputy chairman of the Dubai Police and head of general security in Dubai noted that the nature and price of digital currencies make it such that it is impossible to offer protection guarantees to investors.
According to him, “electronic money will eventually replace cash, but that in itself does not mean that all digital currencies will achieve the trust levels of fiat as long as their source and tracking system remains unknown.”
Dubai SmartWorld chairman Dr. Saeed Al Dhaheri said: “For every one successful digital transaction, there are five failed currencies.”
Experts recommended the formation of a comprehensive legal system for regulating crypto in keeping with the Emirates Blockchain Strategy. To this end, they suggested the launch of a state-backed UAE cryptocurrency, as well as amendments to existing AML and CFT laws to state that they also apply to the use of digital currencies.