Crypto exchange Kraken to launch in UAE after full regulatory approval

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ABU DHABI, United Arab Emirates — American cryptocurrency exchange Kraken is expanding into the Middle East and will open its regional headquarters in Abu Dhabi after receiving a full license to operate a regulated trading platform in the UAE.

“We are incredibly excited to be able to set up our operations right in the ADGM [Abu Dhabi Global Market] to operate a virtual asset platform that finally offers Dirham pairs for investors in the region,” Curtis Ting, Kraken’s managing director for Europe, the Middle East and Africa, told CNBC’s Dan Murphy.

Kraken will become the first cryptocurrency exchange to offer direct financing and trading in UAE dirhams against bitcoin, ether and a range of other virtual assets, after gaining regulatory approval from the ADGM and the Financial Services Regulatory Authority for its launch. local.

“For us, it is really important to facilitate access to global markets and global liquidity by making sure investors and traders in the region have access to local currencies,” Ting said.

Kraken, which launched in 2011 and operates in more than 60 countries, said the UAE launch marks a broader play in an increasingly lucrative region. The Middle East is one of the fastest growing cryptocurrency markets in the world, constituting 7% of global trade volumesaccording to Chainalysis.

The United Arab Emirates conducts approximately $25 billion worth of cryptocurrency transactions each year. It ranks third by volume in the region, behind Lebanon (about $26 billion) and Turkey ($132.4 billion), according to Chainalysis data studied between July 2020 and June 2021.

“One of the reasons we see an influx of entrepreneurs, builders, operators and developers coming into Abu Dhabi and Dubai…is because there is a sense of greater regulatory clarity in ADGM, in Dubai and at the federal level,” Ronit Ghose , global head of banking research at Citi, told CNBC’s “Capital Connection” Thursday.

“It’s frankly amazing some of the talent that the UAE has attracted in the last 12 to 24 months during COVID,” Ghose said. “Is it really starting to establish itself as a crypto center and a web3 hub.”

more competition

Binance, the world’s largest cryptocurrency exchange by trading volume, is among those also considering a greater presence in the Middle East, where cryptocurrency trading is becoming increasingly common.

Binance was given approval to operate in Abu Dhabi in recent weeks, and will recruit for more than 100 positions in the country. Exchange partner Bybit has also received approval to open a branch in Dubai last month, while FTX also received a virtual asset license in Dubai and will soon set up a regional headquarters.

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Rival financial centers in Singapore and Hong Kong are also hoping to create fully regulated environments for cryptocurrency trading, seeking deepen the regulatory mechanisms to attract investments and commercial volumes in an increasingly competitive landscape.

‘grey list’

But while the Emirates might be winning over some of the world’s largest crypto firms, they are also taking a hit. growing international scrutiny for not doing enough to crack down on so-called flows of dirty money. Recent reports claim that crypto businesses in the UAE have been inundated with requests to liquidate billions of dollars in virtual currency, as Russians seek a safe haven for their fortunes, even within Dubai real estate marketin the midst of the war in Ukraine.

Last month, the world’s leading anti-money laundering watchdog, the Financial Action Task Force, also placed the United Arab Emirates on its “grey list” of countries that need additional monitoring. The UAE joins Syria, Turkey and Panama on a list of countries that the FATF says must address money laundering threats.

“It’s important that we pay attention to AML (anti-money laundering) to KYC (know your customer) and other important compliance issues,” Ting told CNBC.

“I think the controls that regulators are putting in place should be relied upon to make sure that if a consumer is going to be exposed and have access to platforms that offer cryptocurrency, they do so in a way that there is some accountability.”