Dubai wants to be the new crypto capital of the world, as well as wealthy Russians looking to avoid the worst of economic sanctions imposed by the West, and so far its efforts are bearing fruit.
The cryptocurrency exchange Bybit said Monday it was moving its headquarters to Dubai from Singapore, and could begin operations as soon as April. In a separate announcement, another crypto exchange in Singapore, Crypto.com, said it was opening a regional hub in Dubai, and “launching a substantial recruitment drive in the coming months.” The exchange claims to have 10 million customers across 90 countries.
“Bybit’s decision to open its global headquarters in Dubai is a milestone in our efforts to position the UAE as a global digital hub,” said Thani Al Zeyoudi, UAE minister of state for foreign trade and minister in charge of talent attraction and retention in a statement on Monday. “To stay ahead in this fast-changing industry, we are building a business-friendly ecosystem with robust regulations to attract, retain and enable high-growth companies.”
The two cryptocurrency exchanges are the most recent additions to the growing league of crypto-related companies stepping up operations in Dubai, one of seven emirates that make up the United Arab Emirates, has been courting crypto exchanges to the country as regulations remain hostile or unclear in other countries.
But crypto companies are not the only ones Dubai has been going after. While Western countries have imposed sanctions meant to harm the Russian economy and its rich oligarchs, Dubai has instead thrown open its doors for wealthy Russian investors.
At least 38 businessmen tied to Russian president Vladimir Putin own villas valued at more than $314 million collectively in the emirate, according to the New York Times. With the uptick in sanctions, the number of Russians seeking property in Dubai has spiked.
Bybit and Crypto.com are the two latest crypto companies to flock to Dubai, but earlier this month, the emirate granted a virtual asset license to Binance, the world’s largest crypto exchange, and to the European subsidiary of Bahamas-based cryptocurrency exchange FTX. With the license the companies can operate legally in Dubai. FTX Europe announced on March 15 that it will also establish a regional headquarters in Dubai.
In March, Dubai passed legislation that has likely helped it recruit crypto companies. Dubai’s government will regulate virtual assets and established the Virtual Asset Regulatory Authority, to oversee the sector. The move is a departure from other countries like Singapore, that have looked to curb some aspects of the crypto sector in recent months. Singapore, where Bybit was previously headquartered, issued guidelines in January that forbid crypto firms from advertising their services to the public, saying crypto was “highly risky and not suitable for the general public.”
The link between Russians and crypto assets is something that Western countries like the U.S. have been weary of since tightening sanctions on the country. Because cryptocurrencies can be traded somewhat anonymously and can be exchanged largely without the participation of banks and other third parties, Western governments have signaled that they could be used to evade sanctions, although these claims have been denied by people involved in the industry, like Binance founder Changpeng Zhao.
In an interview with CNBC Tuesday, Wally Adeyemo, the deputy U.S. treasury secretary issued a warning to any crypto-related companies helping Russians avoid sanctions.
“What we want to make very clear to crypto exchanges, to financial institutions, to individuals, to anyone who may be in a position to help Russia take advantage and evade our sanctions: We will hold you accountable,” Adeyemo told CNBC.
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