Middle Eastern countries were initially apprehensive about blockchain technology and cryptocurrencies, but a few started bucking the trend to embrace the phenomenon.
The United Arab Emirates (UAE) was one of the first countries in the region to wholeheartedly accept digital assets, blazing the trail for others to follow suit.
They recently issued a license to Ripple via the Dubai Financial Services Authority (DFSA). Abu Dhabi-backed MGX also invested $2 billion in Binance.
However, many people are wondering whether this love for crypto from the UAE will spread to other countries such as Kuwait, especially in light of their recent collaboration.
Regulatory Breakthrough for Ripple in Dubai
Ripple recently received approval from the DFSA to provide regulated crypto payments and services in the Dubai International Finance Centre (DIFC). It is the first blockchain-enabled payments provider licenced by the authority.
The news is a massive win for Ripple and the entire crypto industry as they push for acceptance, adoption and regulatory clarity in the Middle East.
The Ripple DFSA licence means businesses in the UAE can use their payment product, allowing indigenes to perform cross-border transactions at lower charges. It is also faster and more transparent than traditional banks.
Financial institutions in the UAE, the Middle East and across the globe want new and more efficient payment solutions that do not involve traditional banking systems.
According to a 2024 survey by Ripple, 64 percent of Middle East and Africa (MEA) finance leaders see blockchain-based currencies as a crucial tool for improving cross-border payments.
Ripple has been gradually spreading its wings across the Middle East, with more countries becoming more welcoming of the crypto revolution sweeping industries. Per the same Ripple report, over 82% of MEA finance leaders are confident of embedding blockchain solutions into their businesses.
Stablecoins are poised to become another alternative financial asset in the UAE, with Ripple launching the RLUSD stablecoin, which has already exceeded $130 million in market capitalisation.
MGX’s $2 Billion Investment in Binance
Abu Dhabi-backed investment group MGX recently invested $2 billion in Binance, making it one of the largest investments in the industry.
Binance is a mammoth cryptocurrency exchange – arguably the most popular worldwide. They have been planting their roots in the UAE, employing around 1,000 Emiratis.
The UAE wants to become the place the rest of the world looks to for its next paradigm-shifting crypto innovation. They want to lead the way for digital asset use and regulation. This investment shows their confidence in crypto.
The UAE wants to operate a technology economy that allows blockchain to reign as it bids to wean itself off crude oil reliance.
Even though Binance has run into regulatory problems in the United States, France and Nigeria, the UAE plans to allow them to satisfy the craving for crypto-driven economic growth.
With backing from MGX, Binance will confidently expand in the Middle East, and a significant chunk of the investment is expected to help bolster operations.
Cooperation Between the UAE and Kuwait May Extend to Crypto and Gambling
The UAE and Kuwait already share strong financial ties, and that bond was made even stronger with their recent agreements on tax avoidance, investment facilitation and stock exchange cooperation.
Both countries are keen on financial innovation that transforms their economy. However, they do not see eye to eye on crypto and have taken different paths.
The UAE welcomed digital assets, allowing crypto firms to settle in the Emirate while creating laws that support the digital asset ecosystem. They also encourage investment in the industry.
Unfortunately, Kuwait has refused to open its eyes to the remarkable potential of the digital asset economy, establishing inhibitive rules and prohibiting blockchain finance.
Another area where the two countries differ is in their stance towards gambling. The former has launched a regulatory body to establish and oversee a gaming industry in the Emirate.
However, the latter has refused to budge despite the presence of several online casinos in Kuwait. They welcome Arab players but are regulated by authorities in other jurisdictions.
Creating a regulatory body to oversee the gaming industry would create another source of government revenue for a country looking for crude oil alternatives.
Legalising gambling will allow the entertainment and tourism sector to flourish. Many gambling platforms accept crypto payments, which would bolster that sector.
The economic boom of the Wynn Al Marjan Island project in Ras Al Khaimah may ultimately convince Kuwait to think differently about its stance towards gambling and cryptocurrency.
They could realign with the modernisation trend gripping the Middle East when they see their neighbours reaping the benefits of a more expansive economy.