Abu Dhabi v Bahrain – which is the Gulf’s crypto hub?
Bahrain and Abu Dhabi are competing to establish themselves as the top crypto hub in the Gulf. Cryptocurrencies are decentralized digital currencies that make use of blockchain ledgers. Both have created cryptocurrency regulatory frameworks, accredited cryptocurrency brokers and exchanges, and funded firms focused on cryptocurrencies.
Along with international initiatives to regulate digital assets and draw cryptocurrency firms, the Gulf region now shows more significant interest in cryptocurrencies. Traditional financial services laws are applied to the bitcoin industry in the pricey financial hubs of New York and London. Less expensive, unregulated nations offer fewer investor safeguards.
Suppose you’re wondering who leads the Abu Dhabi v Bahrain crypto contest. Keep reading this article to learn industry insight and discover expert predictions for MENA’s emerging crypto hub.
Abu Dhabi and Bahrain are Racing to become the Gulf’s Next Crypto Hub.
The UAE has a well-established crypto market, but despite its efforts, all eyes are on Abu Dhabi and Bahrain to become the Middle East’s crypto hub. Due to its policies based on global best practices, the Central Bank of Bahrain (CBB) has received praise. Many of its cryptocurrency regulations are based on European laws, especially those dealing with money laundering. In addition, the monarchy is establishing a market for fostering fintech businesses.
Bahrain boasts more than 120 fintech companies, with the most crowded industries being payments and cryptocurrencies. The epicentre of the region’s banking once stood in Manama, subsequently losing that position. According to the Bahrain FinTech Bay, Bahrain still has 367 financial institutions and over 13,700 workers employed in the sector.
The Financial Services Regulatory Authority of the financial free zone, which Abu Dhabi Global Market runs, establishes cryptocurrency laws and policies in the United Arab Emirates. The authorities gave in-principle licenses to operate some cryptocurrency exchanges in May and June, including BitOasis, MidChains, and Arabian Bourse.
The longest-running exchange in the United Arab Emirates, BitOasis, has been running for about four years in a largely uncontrolled setting. Hub71, the accelerator for Abu Dhabi Global Market and a rival to Bahrain FinTech Bay is where MidChains is headquartered.
The regulatory framework for cryptocurrencies in Abu Dhabi Global Market, a financial free zone, differs from Bahrain’s central bank-driven model. The former facilitates cryptocurrency asset activities in an offshore setting. However, free zone regulations may only sometimes apply to onshore situations in the UAE or the larger Gulf Cooperation Council market.
Ultimately, it will be difficult for Gulf Arab governments to prioritize official support for cryptocurrencies and achieve the correct regulatory balance. The Gulf states have been costly to conduct business amid the crypto competition, especially for institutions providing banking and financial services.
Besides its benefits for quality of life, Bahrain is still a suitable location. It has up to 27% lower yearly operating expenses for financial services institutions than other GCC nations, according to KPMG’s Cost of Doing business in the GCC study. Additionally, the financial services institution operational expenses in Dubai, Abu Dhabi, Saudi Arabia, and Bahrain are measured in the 2022 report both directly and indirectly.
Bahrain and Abu Dhabi are the primary regional influencers in shaping the regulation of Bitcoin activity. Governments in the neighbouring Gulf Arab states have been more at ease experimenting with alternative digital currencies and limited blockchain applications. These are two areas where political control may be expanded.
The competition to become the epicentre of fintech and cryptocurrency in the Gulf is on. However, as regulatory and supervisory controls take centre stage globally, only time will tell which Gulf jurisdiction will endure as some US regulators increasingly see crypto assets as a systemic threat.