The collapse of cryptocurrency exchange FTX continues to be felt around the world, including in the United Arab Emirates, which had been in the midst of establishing itself as a crypto hub.
A Sunday (Nov. 27) report by Bloomberg News noted that many in that country have begun to reassess their moves into the industry, such as Hazem Shish, a former Barclays banker who recently launched a crypto hedge fund in Abu Dhabi.
The fund initially performed well, the report said, citing unnamed sources, although challenges in coming up with institutional money during a rocky market led Shish to step away from managing the fund.
The Bloomberg report noted that FTX was among the first firms issued a license by Dubai’s Virtual Assets Regulatory Authority as part of an effort to entice business, and the exchange established its regional headquarters in the city.
Sources told Bloomberg that many crypto hedge funds that recently began operating in the UAE had invested all their client money on FTX, leading them to scramble to pull out of the exchange before withdrawals were halted to prevent their own downfall.
Two weeks ago, PYMNTS wrote that the UAE was emerging as a leading Middle East crypto hub after already welcoming two of the largest financial centers in the Gulf region — the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Center (DIFC).
Both free-trade zones enjoy liberal tax laws and dedicated commercial courts that function independently of the emirate and federal systems, with each emirate’s regulator — the Dubai Financial Services Authority (DFSA) and the Financial Services Regulatory Authority (FSRA) of the ADGM — charged with managing their respective financial services sectors.
“Unlike lawmakers in Europe who have been beset by delays in their attempts to regulate the crypto industry, the UAE’s independent regulators have been able to move relatively quickly and create friendly regulatory conditions for the world’s crypto companies, while erecting the legal scaffolding for trade and investment in digital assets,” PYMNTS wrote.
For all PYMNTS crypto and EMEA coverage, subscribe to the daily Crypto and EMEA Newsletters.