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ABU DHABI, United Arab Emirates – The US cryptocurrency exchange Kraken expands to the Middle East and opens its regional headquarters in Abu Dhabi after receiving a full license to operate a regulated trading platform in the UAE.
“We are incredibly pleased to be able to set up our operations right at ADGM [Abu Dhabi Global Market] itself to operate a virtual assets platform that finally offers Dirham couples to investors in the region, “Curtis Ting, Kraken’s CEO for Europe, the Middle East and Africa, told CNBC’s Dan Murphy.
Kraken will be the first cryptocurrency exchange to offer direct financing and trading of UAE dirhams against bitcoin, ether and a number of other virtual assets, after obtaining regulatory approval from ADGM and the Financial Services Regulatory Authority for its local launch.
“For us, it is really important to facilitate access to global markets and global liquidity by ensuring that investors and traders in the region have access to local currencies,” Ting said.
Launched in 2011 and operating in over 60 countries, Kraken said the UAE launch marks a broader game in an increasingly lucrative region. The Middle East is one of the fastest growing cryptocurrency markets in the world, accounting for 7% of global trading volume, according to Chainalysis.
The United Arab Emirates trades about $ 25 billion in cryptocurrency each year. It ranks third by volume in the region, behind Lebanon (about $ 26 billion) and Turkey ($ 132.4 billion), according to Chainalysis data studied between July 2020 and June 2021.
“One of the reasons we’re seeing an influx of entrepreneurs, builders, operators and developers coming to Abu Dhabi and Dubai … is because there’s a sense of greater regulatory clarity at ADGM, in Dubai and at the federal level. “Ronit Ghose, Global Head of Banking at Citi, told CNBC’s” Capital Connection “ on Thursday.
“It’s frankly amazing that some of the talent the United Arab Emirates has attracted in the last 12 to 24 months under COVID,” Ghose said. “It’s really starting to establish itself as both a crypto hub and a Web3 hub.”
Binance, the world’s largest cryptocurrency exchange by trading volume, is among those also considering a larger presence in the Middle East, where cryptocurrency trading is becoming more and more mainstream.
Binance has been approved to operate in Abu Dhabi in recent weeks and will recruit for over 100 positions in the country. Fellow exchange Bybit also received approval to open a headquarters in Dubai last month, while FTX also received a virtual assets license in Dubai and will soon set up a regional headquarters.
Rival financial centers in Singapore and Hong Kong also hope to create fully regulated environments for cryptocurrency trading, seeking to deepen regulatory mechanisms to attract investment and trading volumes in an increasingly competitive landscape.
But while the Emirates may be winning over some of the world’s largest crypto companies, they are also coming under increasing international attention for not doing enough to crack down on so-called dirty cash flows. Recent reports claim that crypto companies in the United Arab Emirates have been inundated with requests to liquidate billions of dollars of virtual currency as Russians seek a safe haven for their fortunes, including within Dubai’s real estate market, in the midst of the war in Ukraine.
Last month, the world’s most important watchdog against money laundering, the Financial Action Task Force, also placed the UAE on its “gray list” of countries in need of additional surveillance. The United Arab Emirates joins Syria, Turkey and Panama on a list of countries that, according to the FATF, must address money laundering threats.
“It’s important for us to be aware of AML (anti money laundering) for KYC (know-your-customer) and other important compliance issues,” Ting told CNBC.
“I think trust needs to be placed in the controls that regulators put in place to ensure that if a consumer is exposed and has access to platforms that offer cryptocurrencies, then they do it in a way that there is a certain accountability. ”