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Crypto exchange Kraken to launch in UAE after full regulatory approval

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ABU DHABI, United Arab Emirates – US 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 United Arab Emirates .

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

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

“For us, it’s really important to facilitate access to global markets and global liquidity by ensuring that investors and traders in the region have access to local currencies,” Ting said.

Kraken, which launched in 2011 and operates in over 60 countries, said the UAE launch marks 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 UAE transacts approximately $25 billion worth of cryptocurrency each year. It ranks third in 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 are seeing an influx of contractors, builders, operators and developers into Abu Dhabi and Dubai…is that there is a sense of greater regulatory clarity at 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 the UAE has attracted over the last 12-24 months during COVID,” Ghose said. “Is it really starting to establish itself as both a crypto hub and a Web3 hub.”

More competition

Binance, the world’s largest crypto exchange by trading volume, is also among those eyeing a bigger presence in the Middle East as well, where cryptocurrency trading is becoming increasingly common.

Binance was received clearance to operate in Abu Dhabi in recent weeks and will recruit for over 100 positions in the country. Fellow Exchange Bybit also received permission to open a headquarters in Dubai last month, while FTX also received a virtual asset license in Dubai and will soon establish a regional headquarters.

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Rival financial hubs Singapore and Hong Kong also hope to create fully regulated environments for cryptocurrency trading, seeking to deepen regulatory mechanisms to attract investment and trading volumes in an increasingly competitive landscape.

“Gray List”

But while the Emirates could win some of the biggest crypto companies in the world, it also falls under the scope. growing international surveillance not doing enough to suppress the so-called flow of dirty money. Recent reports claim that crypto businesses in the UAE have been inundated with demands to liquidate billions of dollars worth of virtual currency, as Russians seek a safe haven for their fortunes, including in the real estate market in Dubai, Japan. middle of the war in Ukraine.

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

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

“I think you have to trust the controls that regulators are putting in place to make sure that if a consumer is going to be exposed and have access to platforms that offer cryptocurrency, they do it in a way that there is some responsibility.”