Dubai attracts clutch of major crypto firms with tailored regulations

Crypto firms are rushing to set up shop in Dubai after it began offering licenses for virtual assets, making the Gulf state the latest jurisdiction trying to become a haven for the global crypto industry.

Exchange ByBit, which announced last week that it would move its global headquarters from Singapore to Dubai, joins major industry players Crypto.com, FTX and Binance in establishing a foothold in the city.

The enthusiasm for Dubai among crypto companies comes as their hopes for Singapore as a hub for digital assets have faded. While Singapore has only approved a handful of crypto groups that have applied for licenses, Dubai has attracted several industry heavyweights in the few weeks since launching its licensing program.

Singapore has been seen as an emerging crypto hub in Asia after China cracked down on digital assets last year. Now the crypto caravan has moved on as some companies set their sights on a more accommodative regulatory system in the Gulf.

Binance Chief Executive Changpeng Zhao, who moved to Dubai from Singapore, said the Gulf state's government had attracted crypto companies with its "open mindset and business-friendly attitude."

Binance, the world's largest crypto exchange by trading volume, discussed the rules under which it will now be regulated in Dubai. In December, Binance signed an agreement with the Dubai World Trade Center, a tax-free business park, to advise on the emirate's cryptocurrency regulatory landscape. The Virtual Asset Regulatory Authority, which was established earlier this month, has granted a license to Binance.

Zhao said Binance was committed to forming a bespoke regulator, describing the decision as "very excellent" and praising Dubai authorities as "the smartest regulators and government officials anywhere in the world."

However, Dubai's enthusiastic adoption of virtual assets has raised alarms in some financial circles, given the recent decision by the Financial Action Task Force, a global money laundering watchdog, to place the United Arab Emirates on its so-called "gray list" of expanded currency monitoring procedures to prevent the flow of dirty money.

Lawyers from the U.K. and U.S., as well as former regulators, said a license from the emirate would likely do little to convince Western regulators that crypto exchanges are under appropriate supervision.

Britain has also made a push to become a "global hub" for crypto after City Minister John Glen said in a speech on Monday that the country wanted to be attractive to "firms that don't yet have a firm base." However, lawyers point out that the government needs to push UK regulators, including the FCA, to be more open to crypto operators.

Dubai's crypto charm offensive has quickly attracted several companies. FTX Europe, the exchange's Switzerland-based arm, said in March that it would set up a regional headquarters in Dubai after receiving a license there. Singapore-headquartered Crypto.com opened a Middle East office in the city last week. BitOasis, a Dubai-based crypto exchange, also received a provisional license last week.

Binance has chosen Dubai, where it already employs about 200 people across three offices, as its regional headquarters, Zhao said. In comparison, he said: “The Singapore government is taking a slightly more cautious approach.”

Binance's Singapore unit in December dropped its application for a license to operate a crypto business in the country after regulators ordered Binance Singapore to stop all crypto transfers with global exchange binance.com, which the regulator placed on an investor warning list, saying "may violate local law."

In total, the Monetary Authority of Singapore (MAS) has only issued four crypto licenses after receiving 176 applications for oversight. More than a hundred companies have been turned away, while around several dozen are still hoping for the green light.

“The very low success rate at MAS is discouraging the crypto sector in Singapore,” said Chia-Ling Koh, director of law firm Osborne Clarke, who compiled the figures.

The MAS also introduced a sweeping cryptocurrency advertising ban earlier this year, which Nizam Ismail, managing director of crypto consultancy Ethikom, said was interpreted as MAS's "strong discouragement of offering crypto to consumers." "That seemed a bit harsh to me. It was announced and implemented overnight."

In a move that ministers said would protect Singapore from "reputational risks," lawmakers this week also tightened controls by adopting new rules that will stop crypto companies in the city-state from doing business abroad without a license.

Xue Kai Pang, chief executive of Tokocrypto, a crypto exchange in nearby Indonesia, said: "Singapore is definitely losing some of its luster and attractiveness. . . There are more open countries like Dubai."