In the 70s, Dubai was stationed at the center of the trade intersection formed between Iran, East Africa, and South India. The majority of the trade was conducted with Iran. Hesitant trade activities resulting from political movements in Iran negatively affected Dubai. After the collapse of the Soviet Union, the increase in trade between Russia and Dubai enabled the country to grow its prosperity again. The tourism and service sector were prioritized to minimize the effects caused by the change of conjecture on the country’s trade. For this purpose, starting from the financial field, investments and incentives to innovation were increased. Especially with the popularization of media and internet companies, zero tax private space has been allocated to these sectors. In short, as a result of incentives related to innovation, Dubai has become a frequent visiting place for foreign investors and hot money.

Dubai-based cryptocurrency policies of UAE have started as blockchain technology-based. Once a centralized control mechanism controls blockchain technology, it might lose advantages to existing systems. However, depending on the installed system, it might still benefit security and speed. The government’s policies towards blockchain technology include plans to improve security and efficiency.

We can summarize the steps made in the past three years as:

Since the projects actualized with the government’s help to create an ecosystem will not be adequate in a country, the healthiest ecosystem is created by the private sector competing with one another within the framework of the free market rules through the background formed by the government. Above, we have checked what the government made steps in UAE. In this process, the private sector, primarily actions made by the banks, constitute an essential role. We can summarize developments for this subject as follows:

When we take a closer look at these companies:

As a result, Dubai’s cryptocurrency-friendly policies allow foreign investors to come to Dubai and enable local companies to receive investment easily.

Starting from Dubai, the latest development in the cryptocurrency and blockchain sector through the UAE government and private sector is probably one of the most important developments. Cryptocurrency market Binance had a very stressful year after receiving stern warnings from the regulators of various countries. Experiencing legal problems due to not having a headquarter for the exchange had caused services to stop functioning temporarily or permanently in various countries. CEO of Binance CZ had admitted to having faulty aggressive expansion policies and started cooperating with regulators. While trying to find various solutions to the topic, Binance prioritized hiring people with good relations with regulators and reinforced lobbying activities. As for countries experiencing issues with the activities, local crypto exchanges were purchased.

The epicenter of the problem stems from Binance not having a headquarter, and sooner or later, it has to choose a country. Once the tax amount paid by billions of dollars’ worth exchange is considered, the market’s decision has gradually become more critical. In the end, with the tax incentives, France and Ireland have become the most prominent candidate countries for the headquarter of Binance.

On December 21, the goodwill agreement signed between Binance and Dubai World Trade Center (Dubai WTC) sets forth Binance’s regulation and prevention of money laundering by guiding Dubai WTC through and helping during the operation of cryptocurrency markets and licensing processes. CEO of Binance CZ’s meeting with both Dubai and Abu Dhabi regulators and purchasing a house from Dubai can be interpreted as opening a headquarter in UAE. In the country’s short history, once the zero tax policies and importance towards innovation other than petroleum kept in mind, it can be guessed that UAE might not hold back against giving similar incentives to invite Binance into the country.

As mentioned at the beginning of the article, there are always two opposing groups for and against in every innovative development. To which degree the innovation is needed will not change by how strong the arguments of these groups are or how much supported by the strong lobbies. If innovation is required and needed, it reaches its value sooner or later. There are always some people who oppose the simplest technological tool to the most complex one. From the current standpoint, once the success of cryptocurrencies in 12–13 years is examined, the questions regarding whether this innovation is needed or not become meaningless every single day. Therefore, it can be guessed that the countries benefiting from opportunities created by cryptocurrencies in every field, and protecting their citizens from potential dangers, will show a higher development than other countries. It is never too late to enter and learn cryptocurrency market. However, this rule may not apply to countries.

Prepared By: Berkay Aybey

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