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Standard Chartered Bank’s crypto derivatives firm Zodia Markets plans to expand into Abu Dhabi next year, making the emirate its first outpost in the Middle East and Africa as it targets growth across the region.
Zodia Markets has drawn up an application to operate in Abu Dhabi but plans to submit a new application in early 2023 after lengthy negotiations with regulators.
CEO Usman Ahmed told economic news Abu Dhabi is attractive because it is “forward-looking in establishing a regulatory framework”.
Regulators in the UK, US and Europe have taken a tough stance on cryptocurrencies but have been slow to develop a formal rulebook for the industry. Of the three countries, only the European Union has developed a complete regulatory framework for the industry, which is likely to come into force in 2024.
The oil-rich United Arab Emirates is one of many jurisdictions trying to take advantage of this. Abu Dhabi adopted a virtual asset regulatory framework in 2018, while Dubai passed a law to regulate virtual assets in March.
According to data compiled by Chainalysis from July 2021 to June 2022, the UAE is now the fifth largest cryptocurrency market in the Middle East, after Turkey and Lebanon, with a trading volume of around $28 billion.
Abu Dhabi has already attracted crypto companies including retail-focused exchange Kraken, which received a license to operate in Abu Dhabi earlier this year and has set up a district in the United Arab Emirates capital headquarters.
Rival Binance also received in-principle approval to operate a broker-dealer in the emirate in April, while FTX, the exchange of cryptocurrency billionaire Sam Bankman-Fried, made a similar move in Dubai.
Zodia Markets provides crypto trading to institutional investors and is one of two digital asset businesses established by Standard Chartered Bank. The other is Zodia Custody. Zodia Markets received the Financial Conduct Authority crypto-asset registration in July and is in the process of applying for a similar certification in the Republic of Ireland.
However, Ahmed said its main growth target was countries in the Middle East and Africa, a move that could reflect Standard Chartered’s wider footprint in the region. The bank has traditionally focused on emerging markets, with the Middle East and Africa accounting for £652 million of operating income in the third quarter of 2022, compared with £632 million in Europe.
read FCA strengthens oversight powers to regulate and ban crypto firms
Ahmed said that Abu Dhabi’s existing crypto rulebook “enables companies to have some degree of certainty about the framework within which they can operate. It helps to innovate without having to worry about what will happen.”
“We’ve been in discussions with regulators there for a long time,” he said, adding that the company “has more confidence in participating there” than in countries that have yet to set clear standards for the crypto industry.
To contact the author of this story with feedback or news, please email Alex Daniel
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