Abu Dhabi is quietly making its mark in the financial world. Unlike its neighbor Dubai, known for its consumer-focused market, Abu Dhabi is building a reputation as a hub for institutional finance. The city is becoming a key player in the transition from traditional finance (TradFi) to cryptocurrency. This shift is largely happening in Abu Dhabi Global Markets (ADGM), an offshore economic zone.
ADGM is more than just a financial center. It’s a place where traditional finance and crypto come together. Here, leaders from established banks and innovative crypto companies work side-by-side. In Abu Dhabi, the gap between traditional institutions and the crypto world is closing. The city’s approach to this transition is not just innovative, but also a model for other cities around the world.
ADGM: Fostering Fintech and Crypto Integration
Abu Dhabi is home to the financial services industry, with the ADGM at its core. This offshore economic free zone offers a regulatory framework that benefits those seeking to connect traditional institutions with crypto. ADGM has four main areas of focus in finance, with fintech being one of them. Consequently, the ecosystem regulation incorporates blockchain and cryptocurrencies. Abu Dhabi excels at providing clear guidelines for digital assets, which is particularly beneficial for more institutional financial systems such as prime brokerages, lending, and asset management.
Investing in Web3: The Hub 71+ Digital Assets Initiative
Abu Dhabi Global Markets (ADGM) has attracted significant investment due to its clear regulatory framework and commitment to digital assets, making it an attractive destination for entrepreneurs looking to secure funding in the region. ADGM supports Hub 71, a hub located on Al Maryah Island in Abu Dhabi, which serves as a home for tech startups, investors, and programs designed to stimulate innovation. The Hub 71+ Digital Assets initiative, announced earlier this year, dedicated a $2 billion fund to Web3 projects. Additionally, Abu Dhabi houses the Mubadala Investment Company, the nation’s sovereign wealth fund.
3iQ and Coinbase: New Entrants in Abu Dhabi’s Crypto Scene
The Venom Blockchain Foundation is a foundational blockchain initiative aimed at supporting Web 3 developers in the Middle East and North Africa. It was the first to receive a full license from ADGM in July 2022. This underscores the free zone’s dedication to nurturing digital economy innovation. Despite this, Abu Dhabi hasn’t been spared from crypto winter. In February, Kraken, a crypto exchange, withdrew less than a year after obtaining a license to operate in Abu Dhabi. However, newcomers like 3iQ are finding a sense of community in Abu Dhabi, as reported by St-Jean to CoinDesk, with industry heavyweights such as Coinbase reportedly interacting with ADGM to establish a regional hub in the capital. The forthcoming half-decade promises to be a dynamic period for crypto in Abu Dhabi.