UAE Attracts EU Crypto Ventures Amidst Regulatory Changes
Legal and corporate advisory firms in the UAE are witnessing a surge in interest from European Union-based digital asset businesses seeking to establish or expand their presence in the Gulf region. This trend follows the introduction of stringent regulations governing the crypto-assets sector by the 27-member EU bloc, according to industry professionals.
Various entities, including digital asset exchanges, NFT marketplaces, utility token issuers, tokenized funds, and payments companies, are leading the wave of businesses eager to either relocate or grow their operations within the UAE.
This development has also ignited a proactive response from regional accelerators and venture funds. These entities are working at full throttle to collaborate with these businesses, aiming to support their growth and integration into the UAE market and the broader Middle East region.
New EU Regulations Driving Crypto Exodus to UAE
“A number of European digital asset businesses have approached us to explore opportunities for expanding their operations in the UAE and the Middle East,” said Anna Zeitlin, Partner specializing in fintech and financial services at Addleshaw Goddard, a global law firm with its regional headquarters in Dubai.
Zeitlin highlighted that these businesses represent diverse sectors such as digital asset exchanges, NFT marketplaces, utility token issuers, tokenized funds, and payment services. She attributed this growing interest to the UAE’s “stable, transparent, and commercially-minded” regulatory environment, which is proving highly attractive to EU-based digital asset companies.
Experts in the sector believe that the migration of businesses to the UAE is a direct consequence of the EU’s Markets in Crypto-Assets (MiCA) regulation. Approved in April last year and implemented in full on December 30, MiCA imposes strict rules perceived to challenge the financial sustainability of crypto exchanges and stablecoin issuers operating within the EU.
Dubai and Abu Dhabi: Leading Destinations for Crypto Ventures
Industry analysts point out that European crypto firms are predominantly eyeing Dubai and Abu Dhabi as their preferred hubs for operations. The availability of government-backed incentives and support for new companies is a key factor driving this preference.
For example, the Abu Dhabi Investment Office offers tailored financial incentive schemes for businesses setting up operations in the capital. These programs are designed to cater to the specific needs of individual companies.
Similarly, Dubai boasts an array of public and private accelerators and incubators, such as the Fintech Hive at the DIFC and Wamda, which is supported by Wamda Capital. These initiatives aim to attract financial technology start-ups by providing them with cost-effective market entry solutions.
Zeitlin also emphasized the appeal of the UAE’s evolving regulatory framework. “From a regulatory perspective, there are many developments in the pipeline being driven by the UAE’s financial regulators,” she noted, suggesting that these anticipated changes are playing a significant role in attracting crypto ventures to the region.
Further Expansion into UAE Expected
Industry insiders predict that the influx of European crypto businesses into the UAE will only intensify in the coming months. This is largely due to the financial impact of the new EU legislation on companies operating within the crypto space.
Under MiCA, smaller stablecoin issuers are required to maintain 30% of their reserves in low-risk commercial banks within the EU, while larger issuers like Tether must allocate 60% or more to such banks. These requirements are seen as major challenges for firms striving to maintain operational viability.
In addition to these stipulations, the EU regulation introduces a pan-European licensing and supervisory framework for crypto-asset issuers, platforms, and service providers (CASPs) across a wide spectrum of crypto assets.
Uldis Teraudkalns, Chief Revenue Officer at Paybis, a globally recognized cryptocurrency exchange platform, noted that the new EU regulations are likely to push smaller and even some larger firms out of the region. He explained that the compliance requirements necessitate significant investments, prompting many companies to explore alternative jurisdictions.
“Many businesses are now considering the UAE as their destination for crypto operations, given its growing reputation as a favorable jurisdiction for the digital asset industry,” Teraudkalns said. He added that near-EU jurisdictions like the UK and Switzerland could also benefit, depending on how their regulatory frameworks evolve.
UAE: A Global Leader in Digital Asset Innovation
The EU’s move to establish a comprehensive regulatory framework for crypto assets is the first of its kind globally. However, Zeitlin noted that the UAE is capitalizing on this moment to position itself as a leader in the rapidly evolving digital asset industry.
“The UAE is positioning itself at the forefront of global developments in the digital asset space and intends to maintain its leadership,” she said, adding that the expected influx of crypto ventures aligns with the nation’s vision to remain a global hub for innovation and technology.
