The GCC and MENA region very attractive destination for crypto mining

The GCC and MENA region very attractive destination for crypto mining

Crypto mining is an integral part of the development of crypto economies. As the MENA region opens up its economy to digitization and crypto-related activities and as the world is challenged by an ongoing energy crisis, MENA is probing to become an attractive destination for crypto mining.

While the biggest crypto mining markets are currently in the USA, China, Kazakhstan and Canada, the energy crisis and the crypto bear market could help the GCC become a leading crypto mining hub.

Mohamed El Masri, founder and CEO of Permianchain, which operates Bitcoin mining data centers in Canada using wasted energy, states, “The adoption and implementation of blockchain data center infrastructure can support the digital stability and financial security of the GCC region. Hypothetically, the GCC has the opportunity to attract close to $1.0 trillion in economic growth by laying the groundwork for powering the digital economy.”

El Masri confirms the main challenge is calling out the financial regulators, mainly in the financial free zones, to stop taking the “enforceability approach” and take a “regulate-first approach.”

Nonrenewable resources to boost mining 

El Masri also mentions that given that the GCC is an oil and gas-rich region, there is an abundance of natural gas energy being wasted each day. Notably, such gas energy supports the implementation and commissioning of low-cost power plants to attract bitcoin mining companies from all over the world to set up in the region.

According to him, this will allow the region to become a leader in providing field-generated electricity “to power the future digital economy all while reducing emissions and decarbonizing the GCC’s oil and gas sector.”

The World Bank has reported that the MENA region accounted for 40% of the world’s flaring, with Iran, Iraq and Algeria generating 75% of MENA’s flaring. Meanwhile, Saudi Arabia, Kuwait, UAE and Qatar have low flaring intensity.

Adopting new technologies

Munaf Ali, founder and CEO of UAE-based Phoenix Group, involved in crypto mining equipment sales and projects, believes MENA is fast moving toward crypto and blockchain adoption.

“The Middle East is fast helping the global diversification of jurisdictions which are friendly to operate in,” Ali states. “This goes for countries where crypto firms can set up, whether they are crypto exchanges or mining operations.”

Ali confirms that GCC governments have started to address this by recognizing these new business activities and are issuing licenses to crypto market participants.

The Phoenix CEO espoused other benefits, including job creation, the development of a green renewable energy industry, and the generation of crypto/USD for circulation inside the local economy which in turn boosts economic activity.

Growing interest in mining

UAE investment firms have also shown interest in crypto mining investments. Nabyl Al Maskari, executive chairman of Al Maskari Holding, in a panel discussion during the Security Token Summit in June 2022, noted that there will be significant crypto mining investments happening in the UAE.

“We will have significant crypto-mining investments because the UAE is a low-cost energy producer,” Al Maskari certifies. “We are in the solar belt and have nuclear power with two reactors online. We can as such mine green Bitcoin or other tokens that come out.”

During Binance Week 2022, Khalifa AlJaziri, AlShehhi, Commercial Affairs Regulatory Sector Projects advisor at the Ministry of Economy in UAE, claimed that the Dubai World Trade Center Authority (DWTCA) would be legislating the crypto mining sector. He stated, “We are setting the guidelines and rules needed to regulate crypto mining within this crypto framework.

The UAE is not the only country that has shown interest in crypto mining. Oman Investment Authority (OIA) took part in a $350mn equity round in Crusoe Energy Systems. The US firm helps oil and gas producers cut flaring by using stranded natural gas to power cryptocurrency mining. Crusoe systems set up operations in Oman as well. 

Pierre Samaties, global head of Crypto Economy and Energy, reaffirmed that Bitcoin mining in the region is growing.

“Given we have a huge difference between the summer load curve and the winter load curve, Bitcoin mining helps to support renewable energy investments to increase utilization of the asset by using it during downtimes for Bitcoin mining,” Samaties says. The executive says this helps to balance the energy system.

Samaties also affirms that Bitcoin mining is seen as a strategic asset, a cornerstone for building a crypto economy in the region.

For those who would like to read or share this article in arabic it is also on Cointelegraph MENA 

The UAE Crypto and Blockchain ecosystem employs 7000 people and DeFi is the next growth segment!

The UAE Crypto and Blockchain ecosystem employs 7000 people and DeFi is the next growth segment!

UAE Crypto Oasis ecosystem published its first annual report entitled the “Crypto Ecosystem in the UAE” with the collaboration of Roland Berger. The report highlighted the growth that the UAE has witnessed in its blockchain crypto ecosystem which has resulted in the employment of 7000 people across 1400 blockchain crypto entities currently operating in the country.

As per the report the number of blockchain crypto organizations is more than 1400 in total where 66 percent are native organizations and 34 percent are non-native. Saqr Ereiqat, Co-Founder and Managing Partner of Crypto Oasis Sentio, the investment arm of Crypto Oasis, told LaraontheBlock, “Based on the information we have the blockchain crypto ecosystem in UAE has employed approximately 7000 people.”

These 1,400 plus ventures are leveraging distributed ledger technologies and related technologies to build and provide new value propositions with Blockchain innovation. Interestingly the report confirms that the UAE is now home to 21 crypto exchanges including big names such as Binance and FTX who are now fully regulated under VARA (Dubai’s Virtual asset Regulatory Authority).

Another interesting finding in the report is the registered location of these blockchain and crypto entities. The majority 489 are based out of DMCC (Dubai Multi Commodities Centre) which was one of the first free zones to develop a crypto center. Interestingly IFZA (International Free zone Authority) houses 150 crypto and blockchain entities, while the Dubai World trade Centre, the home of VARA houses 48.

DeFi one of the biggest sectors in the blockchain crypto space is also mentioned in the report. As per the report DMCC has noted that the total value locked into DeFi protocols was $20 billion at the start of 2021 and increased exponentially to $260 billion by the end of the year.

It is also expected that the global DeFi market will hit $507.92 billion by 2028. The report notes that DeFi projects in the UAE include decentralized platforms that allow you to store, exchange or use assets. While the report mentions news where some platforms will allow POS terminals that will allows DeFi to reach the masses in the UAE.

The ADGM (Abu Dhabi Global Market) recently opened its fifth regulatory laboratory sandbox program inviting fintech organization to pitch their ideas on decentralized applications. This is further stance than DFSA; the regulatory arm of DIFC has taken. DFSA recently came out with its crypto feedback statement where it notes that it will not be undertaking anything in DeFi so far.

Finally according to Roland Berger global survey it found that creating a crypto economy strategy is of high priority for 60 percent of executives. While the top three leading sectors in crypto are telco and tech, automotive, transport and logistics, and Construction & Real Estate.

Banks will become Dapps and 2022 is a crypto building year

Banks will become Dapps and 2022 is a crypto building year

The chairman of Belobaba, a crypto native hedge fund with a regulated security token, believes that Banks will become Dapps, and that this was the year of building crypto not a bearish year.

Five year old, Belobaba utilizes big data and AI in its investment decisions… The company is currently setting up its headquarters in the UAE as it seeks to get regulated in GCC region. The hedge fund is already regulated by the Gibraltar Financial services commission and operating legally in the USA, as well as in Spain and Estonia.

Lluís Mas, chairman at BELOBABA spoke to LaraontheBlock expressing his views on the crypto market,the banking sector and why they are setting up their headquarters in UAE.

The hedge fund which currently has just $5 million under management is seeking to grow and expand. According to Mas, “I don’t consider it a bad year for crypto and I wouldn’t call it a bullish or bearish market, because just remember in the bearish markets of 2017-2019 Uniswap was created as were NFTs. For me this year is a building year as we see Ethereum merge and global regulations pick up.  Companies like Black Rock are entering the crypto space and financial actors such as Coinbase are offering crypto products to institutional investors. So for me it is definitely a building year.”

He also states that it is absolutely unfair to talk about a crash of Bitcoin. He says, “Bitcoin is at $20,000 today, it is a far cry from where it started out. We also see billions of dollars being invested in esports, DeFi and blockchain with many projects performing well.”

While he doesn’t foresee any significant changes in the crypto market in the next few months, he does see a pick-up in the middle of 2023.  Mas states, “While I don’t see much change in the crypto scene today, what I do know is that Ethereum is super cheap, and things should start to pick up in mid-2023.”

When touching on the topic of banking and its evolution, Mas mentions a well-known phrase in the crypto community, “ Banks are necessary but bankers not” As he explains, for some time bankers have not been taking care of their customers, which has led to the rise of neo banks. For him the future of banks is Dapps. He explains, “ Banks will slowly become dapps first they have the money and collateral, secondly they are working hand in hand with regulators, so in the next few years they will move to decentralized applications. Bitcoin is not here to destroy, but to make things more efficient and more user friendly. This is unstoppable and our role is to educate as many people as possible.” 

According to Belobaba chairman Dapps stand as the new paradigm and DeFi represents a change in the business model of traditional banking giving the opportunity to put the user at the centre of the value model. 

He notes that the banks of the future will not be huge with 1000 employees, but might be as small and nimble as entities such as Uniswap which has just a dozen or so employees. 

While Belobaba seeks to build one day a crypto bank, the company is also bullish on NFT gaming industry which will reach $800 billion by 2024. Belobaba also sees Security token offerings as a huge opportunity given it has grown by 84 percent. As for crypto, it is expected to become a $24 trillion market by 2030.

In terms of expansion, Belobaba is moving its headquarters to Dubai UAE, and are in the process of seeking a license. Mas says, “We are working with local partners to move our headquarters here. There are two reasons for our move; first given we are originally from Spain, the GCC as a geographic region is a comfort zone. In Gibraltar we are accustomed to the Commonwealth laws, as is the situation in UAE.”

He adds that the region is connected to Asia and other continents, and most in the region are open to investing.

While it might not be easy to get a license says Mas, he is confident that given their track record and strong partnerships such as that with RSM their efforts will be fruitful. He explains, “We are actively looking into Abu Dhabi regulatory ADGM, VARA in Dubai and Bahrain.  RSM is a global network of audit, tax and consulting experts that help us ensure our investors are protected.”

Recently Belobaba invested 1 million Euros in Team Queso, a leading esports club in mobile gaming.

Select UAE Local bank customers can now trade with Binance in Dubai

Select UAE Local bank customers can now trade with Binance in Dubai

Binance, crypto exchange has received its Minimal Viable Product (MVP) license from Dubai’s Virtual Asset Regulatory Authority (VARA). Local bank clients approved by VARA will be able to utilize the Binance platform. Users will benefit from higher consumer protection levels because Binance is now a fully regulated platform in Dubai.

Binance is now able to open a client money account with a UAE local bank and provide services to qualified customers. Services include, virtual asset exchange services, conversion between virtual assets and fiat currencies, transfer of virtual assets, custody and management of virtual assets, virtual token offering and trading services and virtual assets payments and remittance services

His Excellency Helal Saeed Almarri, Chairman of VARA said, “We are pleased to have Binance licensed to operate within the VARA MVP Programme. The VARA regime aims to strike an effective balance between value creation and risk mitigation, enabling open market innovation while assuring protection for the economically vulnerable. The MVP Phase, is designed for select global players across the value chain, that are committed to responsible industry participation and VARA looks forward to Binance being an active contributor, reinforcing Dubai’s commitment towards creating a next-gen secure ecosystem for this future economy.”

Changpeng Zhao (CZ), founder and CEO of Binance, commented: “At Binance we welcome regulations that are globally consistent, enable responsible innovation, protect users, and give them choice. VARA’s unique operating model is setting a benchmark for the global industry, and this most recent registration is an acknowledgement of our compliance and safety processes in the new regulatory framework.  We strongly believe there is a significant opportunity to work with our industry peers to develop consistent implementation standards around the world as we have been doing in Dubai.”

Alexander Chehade, Binance Dubai General Manager, noted: “Our registration in Dubai is a reflection of the country’s progressive stance on blockchain technology and its willingness to embrace this sector through collaboration. We look forward to continued partnership as we build upon our team and operations in Dubai to roll out additional services including local banking capabilities and enhanced products.”

$14 billion crypto exchange announces MOU with Dubai Virtual asset regulator

$14 billion crypto exchange announces MOU with Dubai Virtual asset regulator

Blockchain.com announced on twitter that it has signed an MOU with Dubai Virtual Assets Regulatory Authority ( VARA)which they say means that soon both retail and institutional clients will be able to access Blockchain.com through Dubai UAE.

The post goes on to add that crypto investors in Dubai and its surrounding regions will soon be able to experience Blockchain.com’s full suite of retail and institutional brokerage tools including custodial services, an exchange, and OTC crypto brokerage services for institutional clients.

Blockchain.com also noted that they are opening a local office and will be hiring in the region. As they stated, “We are also actively pursuing a local Minimum Viable Product license, followed by a full license as soon as it becomes available.”

Already Blockchain.com is licensed in the U.S. and several other European jurisdictions, and is actively pursuing a license in Germany, Netherlands, France, Spain and Ireland. Blockchain.com is valued at $14 billion. 

To date VARA has licensed Binance and FTX with a fully regulated MVP License which is what Blockchain.com is seeking to have. In addition VARA has provided BitOasis, ByBit, CoinMena, CoinMetro, Crypto.com, GCEX, Huobi, MidChains, Rain and OKX with preliminary licenses.

VARA has yet to make an announcement with regards to Blockchain.com

As International crypto exchanges expand their regulatory territory with some hiring, others such as regional crypto exchange RAIN continue to reduce their employee base. RAIN announced a reduction of 20 percent of its workforce in the past weeks.

New rules govern how virtual assets are marketed in Dubai

New rules govern how virtual assets are marketed in Dubai

Dubai’s Virtual Asset Regulatory Authority (VARA), with the commencement of its Minimum Viable Product (MVP) Phase, has announced Regulatory Guidelines on Marketing, Advertising and Promotions of VA across the Emirate of Dubai.

The new VARA regulations specifically address marketing and communications activities, ahead of operationalizing the MVP licensees so that any mass-market information dissemination and consumer solicitation are designed to safeguard community interests.

Regulations on Marketing, Advertising and Promotions of Virtual Assets cover all forms of outreach, communications and advertising, including publication of information, awareness building, customer engagement, and/or investor solicitation.

VARA rules extend to VA related communications by any entity leveraging Dubai-based media sites, search platforms, and online or off-line publishing channels that explicitly target customers within the Dubai market, establishing guardrails on permissible audience segments, in addition to content obligations.

Equally all content dissemination channels operating from Dubai are obligated to act responsibly, and ensure compliance with prevailing Guidance as it pertains to VA communications facilitated via their platforms.

VARA guidelines further detail the obligations of Dubai licensed VASPs and any advertising platforms that are positioning VA content across traditional and new-age media channels for the Dubai market, to ensure factual accuracy, explicitly demonstrate any promotional intent, and in no way mislead on the guaranteed nature of their returns.

The principles are supplemented by rigid enforcement standards and penalties for non-compliance that collectively provide market confidence ahead of MVP operations, as it augments marketing, data protection and consumer protection laws that have been well embedded across the UAE.

Dubai Virtual Assets regulator licenses digital asset fund of 1 billion USD

Dubai Virtual Assets regulator licenses digital asset fund of 1 billion USD

VARA has made public all the entities that are currently licensed under its authority. The entities fall under various categories including crypto exchanges, DeFi custodians, DeFi asset managers, DeFi service providers, and DLT platforms.

 As per VARA website in terms of native crypto exchanges, 13 crypto asset exchanges hold licenses. They include both international and regional players such as Binance, BitOasis, ByBit, CoinMENA, CoinMetro, Crypto.com, FTX (fully regulated with MVP license), GCEX Huobi, Midchains, Rain and OKx.

In terms of DeFi custodians, VARA has registered Hex Trust, Komainu, Monstera and ZampFi Labs . Hex Trust as one example is a fully-licensed and insured provider of bank-grade custody for digital assets. Through their proprietary platform Hex Safe™, they deliver custody, DeFi, brokerage, and financing solutions for financial institutions, digital asset organizations, corporate and private clients.

While ZampFi, is founded by: Amit Jain who was previously the Managing Director at Sequoia Capital. ZampFi is a digital banking entity.

VARA is also offering regulated licenses for DeFi asset managers. Names on the roster include Brevan Howard, Fintonia, Galaxy Digital, Nine Blocks and Noia Capital.

Bravan Howard asset management firm on Dubai VARA’s list has recently pulled off the largest crypto hedge fund launch as per the Block media. The firm’s flagship digital assets focused vehicle raised more than $1 billion from institutional investors, according to four sources with knowledge of the matter.

Brevan Howard Digital Asset Multi-Strategy Fund lost a scant 4% to 5% from inception through the end of June 2022, according to the source, even as the one-two punch of the implosion of Terra stablecoin UST and the insolvency of crypto lenders, such as Celsius and Voyager, locked price action and liquidity into respective death spirals.  “Their returns, relative to the market, are unbelievable,” another source adds.

Their strategies, including quantitative trades and relative-value plays, are implemented by teams of portfolio managers structured in so-called “pods” that feature supporting analysts and engineers. The division, additionally, now has more than 20 external blockchain engineers working under full-time retainers.

The global-macro-focused Brevan runs about $23 billion overall across a wide range of asset classes.

Brevan Howard Digital Asset Multi-Strategy Fund remains open to external capital, pursuant to a minimum check of $5 million. Its limited partners include a number of the world’s largest and most sophisticated hedge fund investors, including entities that have historically exclusively backed traditional financiers.

As for Fintonia, its Group founder Adrian Chng stated, “Dubai is making significant strides towards establishing itself as a virtual assets hub and creating a conducive environment for the industry’s growth. The virtual asset licence marks an important milestone in our aspiration to have a presence in every region where there are inn

As for Fintonia, its Group founder Adrian Chng stated, “Dubai is making significant strides towards establishing itself as a virtual assets hub and creating a conducive environment for the industry’s growth. The virtual asset licence marks an important milestone in our aspiration to have a presence in every region where there are innovative Web3 and crypto companies, enabling us to connect and collaborate with members of the crypto native ecosystem and the traditional financial services industry.”

Recently added is Nine Blocks Capital Management which was launched by PwC’s former global crypto head Henri Arslanian. Nine Capital has launched a $75m crypto hedge fund focused on institutional investors with the aim of becoming the world’s leading institutional grade crypto asset management firm as per a statement from the fund on launch.

The new fund is backed by $75m from Hong Kong-based hedge fund Nine Masts Capital Management, with additional investments from other partners.

Noia Capital has also joined the roster and is a Luxembourg based actively managed alternative asset manager pursuing excellence in digital assets and blockchain technology investments. As per the website the company is registered with CSSF and FSMA.

In terms of DeFi service providers the list includes Amber Group, Equiti, ScallopX, and TPS Capital.

VARA has also offered licenses to DLT platforms that include names such as Calvin Cheng Web3.0 Holdings, Mcontent, Polygon, and Woonkly Labs.

Finally in terms of DeFi services VARA has the following registered entities, BRE Holdings, Eros Investments, Hike, and Prypto.

VARA has yet to license NFT marketplace entities, crypto mining entities, and security token platforms.

Japanese crypto custody provider receives provisional license from Dubai VARA

Japanese crypto custody provider receives provisional license from Dubai VARA

Komainu,  a regulated digital asset custody provider created by Japanese investment bank Nomura, digital asset manager CoinShares and digital asset security company Ledger. has been granted a provisional regulatory approval from Dubai’s Virtual Assets Regulatory Authority [VARA] to commence operational readiness. The provisional license will enable Komainu to be amongst the first fully regulated digital asset custody services to institutional clients in the region.

As per the press release, Komainu acts as key gatekeeper to institutions gaining exposure to the digital asset industry with the provision of secure and regulated digital asset custody services for blockchain and beyond. Over the years, Komainu has established itself as one of the leading digital asset custody providers for institutional clients, providing the same safeguards and protections investors are accustomed to in traditional finance. The Custodian’s industry-leading services have been designed by security, financial services and cryptocurrency experts and have been approved by external auditors.

Komainu has elected to base its regional HQ in Dubai and participate in this fast-evolving global virtual asset valley – in order to establish its leadership in the provision of institutional-grade digital asset services across the wider region.

H.E. Helal Saeed Almarri, Chairman of VARA, said, “Komainu’s entry into VARA’s regime is symbolic of the confidence and credibility that the Virtual Assets industry is gaining when backed by such strong endorsement from traditional finance leaders like Nomura. Such acceptance and active participation of tier 1 global institutional finance firms is not only an affirmation of Virtual Assets being integral to the future of finance, but also indicative of the potential that this industry can offer for economic empowerment. Dubai is pleased to welcome credible players like Komainu into VARA’s virtual assets ecosystem.”

The regulatory license once received, will establish Komainu as one of Dubai’s first regulated crypto custody providers, bringing a much-needed service to the proliferating regional ecosystem. The endorsement from the Dubai Government strengthens the Custodian’s fast-paced growth projections, in line with their core underpinning of doing so in a secure, robust and regulated manner. With the continued support of the Dubai regulators, Komainu is set to be a first mover in the MENA region.

Sebastian Widmann, Head of Strategy at Komainu, said, “Dubai and VARA are establishing a new hub for digital asset businesses and bringing like-minded companies into the country to help establish its growing crypto ecosystem and we look forward to contributing to these exciting developments. Komainu actively works with regulators, partners and our clients to make sure that our platform is held to the highest of standards and this latest endorsement by the Dubai Government is a further testament to that fact. By expanding into the MENA region, we are bringing a much-needed service to institutions operating within a regulated crypto marketplace. We are excited to bring Komainu Yield as well as the other new services set to launch in the near future to this marketplace and thereby serve a new demographic of institutions.”