Binance Abu Dhabi director: “regulatory approaches may evolve”

In an exclusive interview with crypto.news, Dominic Longman, senior executive director of Binance Abu Dhabi, discusses the growing institutional interest in cryptocurrencies, potential crypto ETFs, and the region’s efforts to attract web3 talent.

In February, the Financial Action Task Force (FATF) removed the United Arab Emirates and several other jurisdictions from its gray list, stating that the region had “strengthened the effectiveness of its AML/CFT regime to meet its commitments in the Strategic Deficiencies Action Plan , which the FATF identified in February 2022.”

Crypto.news interviewed Dominic Longman, senior executive director of Binance Abu Dhabi, to discuss the implications of this removal for cryptocurrencies in the region.

Question: Since the UAE was recently removed from the FATF gray list, the region appears to be gaining significant traction. For example, US-based companies such as Chainalytic are currently opening offices in this area, so I would like to understand if this development has led to a change in cryptocurrency adoption among traditional companies such as venture capital firms, pension funds, banking giants, or if exclusion from the gray list did not significantly affect local perception of cryptocurrencies.

AND: The recent exclusion of the UAE from the FATF gray list represents a positive development for the region’s financial landscape and the UAE’s position as a leading economic power in the MENA (Middle East and North Africa) region. It reflects the country’s commitment to improving the regulatory framework and transparency. While it is difficult to quantify the direct impact on institutional adoption of cryptocurrencies, it is encouraging to see international recognition of the UAE’s progress in the fight against unfair financial practices such as money laundering.

We are seeing increasing institutional interest and activity in the crypto space and believe that over time this could pave the way for wider adoption among various financial institutions. The UAE is leading the adoption of cryptocurrencies globally and has established itself as a leading cryptocurrency hub, an ecosystem that Binance is proud to be a part of and which enables further developments. By encouraging and facilitating collaboration among key stakeholders in the ecosystem, including governments, regulators, innovators, startups and established organizations, we can create synergies and accelerate blockchain adoption in the region.

Q: There are currently no Bitcoin Exchange Traded Funds (ETFs) available in the UAE. Given the recent approvals of Bitcoin ETFs in the US and Hong Kong, what are the chances that the UAE authorities will change their approach? Furthermore, how significant can the UAE market become for cryptocurrencies, given that Hong Kong, despite a diverse offering with Bitcoin and Ethereum ETFs, has not attracted as much capital as expected?

AND: The approval of Bitcoin ETFs in the US and Hong Kong is a significant milestone for the cryptocurrency industry, indicating growing acceptance and recognition. The launch of the spot Bitcoin ETF brings legitimacy to the digital asset industry while building confidence in the market among a broader audience and has resulted in a surge in trading volumes, reflecting the increased availability of cryptocurrency investments for both retail and institutional investors. While there are currently no Bitcoin ETFs available in the UAE, regulatory approaches may evolve based on global trends and local market requirements.

The UAE has shown a proactive stance towards blockchain and cryptocurrency innovation, so there is potential for future development in this area. In terms of market importance, the UAE’s strategic position and forward-looking virtual asset policy have placed the country at the forefront of cryptocurrency adoption and cemented its status as an international cryptocurrency hub, as highlighted in the Henley & Partners Crypto Wealth Report 2023, which stated that the UAE Saudi Arabia boasts the highest cryptocurrency adoption rate in the world.

Q: In Europe, many small and medium-sized cryptocurrency startups tend to register in Lithuania, Estonia or other Eastern European countries due to their relatively simplistic regulatory approach to cryptocurrencies. What challenges, if any, do companies face when starting or expanding their crypto businesses in Dubai?

A: Navigating regulatory requirements and ensuring compliance can be complex, but the UAE government is actively working to provide a dynamic environment for cryptocurrency startups by developing robust infrastructure and support initiatives that ensure transparency and streamline the business start-up processes.

Some large industry players and regulators such as VARA have stated that the transition to a regulated virtual asset model – including access to banking services, regulatory capital requirements and staffing costs, among others – is a significant undertaking, but plans to enable an approach to these issues based on collaboration between stakeholders (i.e. larger companies helping smaller startups with compliance and legal processes).

In particular, the growing influx of crypto companies moving into the UAE has also had an impact on talent attraction and has generated a growing talent pool for the industry in the country, further boosted by government-backed coding schools and other talent-focused initiatives (i.e. visas) facilitating crypto companies finding the talent needed for local development.

Binance is actively expanding its presence in the UAE, particularly in Dubai, due to the Emirate’s leading position in web3 growth and development, and the enabling and forward-looking regulatory environment and government initiatives supporting the digital asset ecosystem. Additionally, the government’s proactive stance on blockchain technology, as evidenced by initiatives such as the Dubai Blockchain Strategy and Metaverse Strategy, underscores its commitment to driving innovation in the MENA region.