Complex Made Simple

Exclusive: Interest in crypto assets growing in the UAE

Saeed Hareb Al Darmaki, Strategic Advisor, Digital Assets Exchange (DEX) breaks down what a regulated cryptocurrency exchange is, how it is safely regulated by the FSRA, and what the future of investments into crypto assets looks like.

Digital Assets Exchange (DEX) has received in principal approval (IPA) to operate a cryptocurrency exchange FSRA’s crypto asset regulatory environment encourages individual investors and large institutions to trade in crypto assets Blockchain ensures transparency: you can see the source of every single crypto asset from beginning to current

Financial institutions in the UAE and the GCC region are beginning to pour funds into crypto assets. The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) has taken cognizance of this in a timely manner and has developed a crypto asset regulatory environment over the past year that encourages individual investors and large institutions to trade in crypto assets comfortably.

Digital Assets Exchange (DEX) is one of only a handful of companies that have received in-principal approval (IPA) to operate a cryptocurrency exchange, subject to the FSRA’s final approval. Within this framework, know-your-customer (KYC) and anti-money-laundering (AML) validated customers can be on-boarded onto an exchange that permits them to start placing buy and sell orders on the cryptocurrency platform. 

Although, only four cryptocurrencies have been approved by the ADGM so far: namely Bitcoin, Bitcoin Cash, Ethereum and Litecoin, this move is indicative of a trusted and regulated environment that caters to the growing demand for crypto and digital assets.

“As a regulated exchange, we have to make sure that crypto assets are safely stored in the custody that we have – third party providers who will ensure that all the crypto assets are stored safely on behalf of customers. So, they know that if they have their assets on our exchange, then it’s protected and it’s safe. I mean, there have been cases of hacking and people losing their coins. But that’s if you’re doing it individually and you don’t have a professional third-party that is specialized in the safe custody of crypto-assets. So, as a regulated exchange, you can be sure that we will make the utmost effort, a priority to ensure that all the assets of customers are safely held. There is also a capital reserve requirement that is requested from the regulator; so we have to ensure that we have a capital reserve requirement in case there are any customers that have lost funds can to be reimbursed,” explains Saeed Hareb Al Darmaki, Strategic Advisor, Digital Assets Exchange (DEX) in an exclusive conversation with AMEinfo.


Clarity, transparency, immutability

The Financial Services Regulatory Authority (FSRA) and the Abu Dhabi Global Market (ADGM) have given clarity on crypto assets that even the United States’ Security Exchange Commission (SEC) has kept ambiguous. 

“The SEC has not been very clear about how they see foresee crypto assets. One day they consider it a commodity; another day they consider it a security. So, there’s a lot of ambiguity in the U.S. and some other countries. However, in Abu Dhabi, the FSRA has put in a clear regulatory framework. This is a great way to improve the cryptocurrency infrastructure in the UAE and in the region. So, in the next few months and years, I expect the market to grow at a very fast pace,” Saeed Hareb Al Darmaki said.

There is the added benefit that the “blockchain” technology driving cryptocurrency is still very young. This has drawn a lot of visionary investors who see the benefits of investing in cryptocurrency assets at an early stage. For those seeking reassurance regarding the technology, the promise of transparency and immutability allay fears.

“You can see all the transactions that are done. So in that way, it is transparent; you can see the source of every single cryptocurrency asset from beginning to currently. So, it’s always updated on the network. There are miners who always verify all these transactions. So, it’s a trust-based network and you know that there’s no central authority controlling the flow of the transactions. It’s all being monitored by the blockchain. It’s all being verified and recorded on a blockchain. So that way, there’s full transparency as to where the transactions are happening. Immutability – once the transaction is verified and is done on the blockchain, then there’s no way to reverse it. So in traditional banking for example, if you send a wire transfer, it can be reversed in some cases. But with a blockchain transaction, once a transaction is verified, then it stays on the network and nobody can change it. So, I think, that’s a good way of making sure that there’s no foul play with any transactions,” Saeed Hareb Al Darmaki said.