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DUBAI – Mubadala-backed tech startup ecosystem Hub71 is believed to have secured access to leading US cryptocurrency exchange Coinbase to establish an international hub in Dubai united arab emirates (UAE) capital Abu Dhabi, according to a tweet on Sunday by Ibrahim Ajami, head of venture capital and growth at Mubadala.
At a tech event in Dubai on May 8, Coinbase CEO Brian Armstrong said the UAE could become a hub for the Middle East, North Africa and parts of Asia.
Rudy Shoushany, founder and CEO of digital transformation talk show DxTalks, said Coinbase’s recent activity in the UAE culminated, the focus on the Hub71 investment, and Ajami’s tweets all suggest a deal between the two entities may have been finalized.
“Learning about all of these, including [Ajami’s] The tweet seems to confirm that Coinbase is setting up an af base or regional headquarters there,” he said, though no official announcement has been made by Hub71 or Coinbase.
what happened: On Sunday, Ibrahim Ajami, Mubadala’s head of venture capital and growth, welcomed Coinbase “to Hub71 and Abu Dhabi” in a tweet. Mubadala is Abu Dhabi’s second largest sovereign wealth fund.
Hub71 told Al-Monitor that as part of a trip to the UAE, Coinbase visited its Abu Dhabi headquarters last week and discussed the digital asset industry in their respective regions. Hub71 did not comment on whether Coinbase would operate in the emirate’s capital or open an office with them.
welcome @coinbase To Hub71 and Abu Dhabi @hub71ad
— Ibrahim Ajami (@IbrahimAjami) May 14, 2023
Coinbase’s executive team, which includes Armstrong, previously announced on May 7 that it would visit local partners and regulators, among other things, according to a blog post from the company.
The U.S.-based cryptocurrency exchange plans to hold discussions with Abu Dhabi Global Market and Dubai’s Virtual Assets Regulatory Authority (VARA) about setting up a presence in the UAE, the post said.
Coinbase said it was interested in the UAE because it is the world’s second-largest sender of remittances and the sixth-largest center for cross-border wealth management. The UAE and Saudi Arabia hold 70 percent of the wealth in the GCC countries, the blog post continued.
Speaking at the Dubai Fintech Summit (May 8-9), Armstrong called the Middle East “an exciting region for technology development”. He said his firm has invested in regional cryptocurrency firms, such as Bahrain-based cryptocurrency brokerage Rain.
Why it matters: Earlier this month, Coinbase had a standoff with the U.S. Securities and Exchange Commission (SEC) and said cryptocurrency firms were establishing hubs overseas, seeking a more supportive regulatory framework like the United Arab Emirates.
“We would like to see a similar approach in the U.S., rather than regulation through enforcement, which has led to disappointing cryptocurrency trends in the U.S.,” the cryptocurrency exchange said, according to Reuters.
Armstrong has warned that unless the rules in the U.S. and U.K. are clearer, crypto companies will create offshore safe havens.
Cryptocurrency companies operating in the U.S. have been facing the fear of being shut down because of undefined guidelines that give the government carte blanche to operate, Shoushany said.
“Gary Gensler, the head of the SEC, can issue notices of violations of unknown regulations — regulations that don’t even exist — that could force a company out of business,” he said, adding that relying on the system is a problem. a failure strategy.
On the other hand, Shoushany said that the UAE last year launched regulators such as VARA and the Dubai Metaverse Strategy to stay at the forefront of emerging Web3 technologies.
In Abu Dhabi, Hub71 launched a $2 billion initiative in February to advance a decentralized Web3 ecosystem, including blockchain and metaverse applications. The program provides Web3 startups with a progressive regulatory environment and access to governments and investment partners, including Binance Lab’s $500 million investment fund.
“Coinbase may leverage on this $2 billion investment and even contribute to it by relocating to the UAE,” Shoushany said, but explained that no intentions have been made public yet.
The kind of incentives, less restrictive regulatory and tax structure that takes about four to five years to develop is attractive to companies like Coinbase and allows them to grow rather than kill them, he added.
Shoushany said Abu Dhabi will not issue full licenses to any crypto firms at this time as it seeks to work with companies to determine what Regulations and Restrictions should be in place to move the industry forward without huge penalties.
background: The 2022 crypto bust hurts the UAE’s crypto market. In early May, VARA announced that it had condemned cryptocurrency firm Open Exchange for unregulated activities in April.
Prior to this, in February, cryptocurrency exchange Kraken announced that it would close its Abu Dhabi office. Also in early November 2022, Bahamas-based exchange FTX filed for bankruptcy after obtaining a Dubai license in March of that year, and caused ripples around the world after its public collapse.
Later that month, Binance CEO Changpeng Zhao came out in support of cryptocurrencies and assured Abu Dhabi Financial Week attendees that this was the future.
Atlas Capital chief economist Nouriel Roubini took to the main stage of the event after Zhao and berated the chief executive, calling for his license to be revoked and him kicked out of the UAE , for his role in the collapse of FTX, alleging corrupt business practices.
Last year, the U.S. Department of Justice investigated Binance for possible violations of money laundering rules, and in March, the U.S. Commodity Futures Trading Commission sued Binance for operating allegedly illegal transactions and a sham compliance scheme.
learn more: this UAE’s Cryptocurrency Ambitions Despite the chaotic crash of FTX, the FTX crash will continue — even if the FTX crash could jeopardize the future of an already volatile industry. This is because the Middle East and North Africa is the fastest growing cryptocurrency market in the world by 2022, and the UAE has moved aggressively to attract cryptocurrency companies to the country.
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