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A digital assets fund has been established in Dubai by the global crypto leader of PwC, demonstrating how the city is luring cryptocurrency business while other alleged hubs like Singapore and Seoul are tightening regulatory oversight of the industry.
According to Henri Arslanian, who established his digital assets fund Nine Blocks Capital Management in the Gulf city after receiving provisional regulatory approval, Dubai's "crypto openness" was a factor in his choice.
The Hong Kong-based hedge fund Nine Masts Capital, the chief backer and largest shareholder of the digital assets fund, will contribute $75 million to it. Three portfolio managers have also been appointed in the Cayman Islands.
The presence of the fund in Dubai comes as the city works to become a crypto hub after Asian financial hubs like Singapore and Hong Kong appeared to lose interest in the industry following a severe market decline and wave of corporate failures.
Arslanian added that Nine Blocks had also given Singapore some thought, saying "Hong Kong would have been a natural home for us."
Cayman and Dubai, on the other hand, "made a natural choice when we looked at the broader ecosystem," he said, citing elements like quick regulatory approval processes and accessibility. Most foreign visitors to Hong Kong are still required to stay in quarantined hotels.
Arslanian announced that he had already moved to Dubai while keeping his senior adviser position at PwC. He continued by saying that while Dubai's transportation options and time zone—which is just four hours behind Singapore—made it simple to cover the region, the fund may later add a base in Asia.
Dubai's cryptocurrency push comes after rival regional hubs Singapore, Hong Kong, and Seoul increased scrutiny of the fledgling industry.
The Monetary Authority of Singapore's chief fintech officer, Sopnendu Mohanty, declared in June that the city-state would punish bad crypto behavior with "brutal and unrelentingly hard" measures.
Only a few days later, Singapore's watchdog censured Three Arrows Capital, a once-reputable cryptocurrency hedge fund that failed when the market for digital assets was hit by a credit crisis.
Some of the biggest participants in cryptocurrency have been welcomed in Dubai. While rival exchange FTX announced last week that it had received approval to operate in the country, exchange Binance announced a Virtual Asset License from Dubai regulators last year.
According to Arslanian, the city's "tier-one" regulatory and licensing structure attracted funds like his, which are trying to draw in institutional investors.
In the last two months, Dubai's digital assets regulator has granted provisional licenses to cryptocurrency exchange CoinMENA and Komainu, a crypto group backed by Japanese investment bank Nomura.
According to Carlton Lai, head of blockchain and cryptocurrency research at Daiwa Capital Markets, "I think it [Dubai] is currently the most appealing destination for many major crypto firms." He also noted that the city had moved "very quickly" to grant licenses.
When compared to places like Singapore and Hong Kong, he continued, "things have not only moved very slowly, but there has been numerous regulatory flip-flops that simply reduces the confidence in its regulatory direction."
By fLEXI tEAM