Binance has broken new ground in Dubai after becoming the first cryptocurrency exchange to receive an Operational Minimum Viable Product (MVP) license in Dubai.
The latest step in Binance’s licensing journey in the United Arab Emirates will allow it to offer exchange and broker-dealer services to institutional and qualified retail investors, who will also be able to convert cryptocurrency to fiat in accordance with Dubai’s Virtual Assets Regulatory Authority rules.
Binance has progressed past its provisional license, which was granted in 2022. The operational MVP license means that UAE users are afforded investor protection and market assurance standards that are required by VARA for exchange services in Dubai.
Binance regional markets head Richard Teng highlighted the importance of collaboration with Dubai’s regulators in ensuring KYC and customer due diligence checks are carried out with user onboarding.
“Our priority is to be able to operate this first fully regulated exchange in, and from Dubai, in a FATF-compliant ecosystem, setting the stage for global scalability with uncompromised user assurance,” Teng said.
Dubai is increasingly being discussed as an emerging hub for cryptocurrency exchanges, businesses, and the wider ecosystem, in the same vein as “crypto hubs” like Switzerland’s Canton of Zug, Singapore, and Bitcoin adopter El Salvador.
Binance CEO Changpeng ‘CZ’ Zhao has been fairly open about his company’s efforts to focus on compliance during its rapid expansion into new markets around the world. Where possible, Binance has been seen engaging with local regulators or governmental departments over offering its services in various countries.
The exchange has been more welcome in some countries than others, with registration failures in countries like the Netherlands evidence that the exchange is sometimes unable to meet the requirements of certain jurisdictions.
Dubai has proven to be a city where Binance has seen far more luck, with CZ having been frequenting the futuristic city to engage with regulators and authorities over offering its services and engaging in the development of a budding cryptocurrency ecosystem.
Binance first received a provisional license to offer its services in Dubai in March 2022, which was followed by the second stage of a four part licensing process in the form of a preparatory MVP license in September that year.
Binance also received a license from the Abu Dhabi Global Market (ADGM) in November 2022, allowing the exchange to offer cryptocurrency custodial services to professional clients once it has met the requirements of the ADGM license.
The UAE has established itself as a hub for the cryptocurrency ecosystem through crypto-friendly regulatory approaches from both Dubai and Abu Dhabi.
The two emirates (states) have developed progressive regulatory guidelines through the ADGM and Dubai’s VARA. Both bodies have issued clear definitions for cryptocurrency and digital assets over the past couple of years, giving businesses peace of mind from a compliance standpoint.
CCN has been told by different industry insiders that companies in the United States in particular have been considering setting up regional headquarters in Dubai or Abu Dhabi, given the regulatory uncertainty being exacerbated by the Securities and Exchange Commission.
A prime example was high profile visits to the country by Coinbase executives, including CEO Brian Armstrong, to meet with regulators from both the ABGM and VARA earlier this year.
Speaking at the Dubai Fintech Summit in May 2023, Armstrong said that the UAE was a potential international hub within which Coinbase could serve “not only in the Middle East but parts of Africa or other countries in Asia”.
Dubai’s VARA has also signaled that it is actively monitoring exchange operations to ensure that regulations are being met, after suspending the provisional license of BitOasis for not meeting undisclosed parameters of its license.
Meanwhile, another major cryptocurrency exchange firm in OKX received its preparatory license from VARA in June 2023. The company plans to increase the size of its local office while it takes the final steps behind Binance in order to receive an operational MVP.
ByBit also currently operates off a preparatory MVP license in Dubai, which only allows the exchange to serve a small group of accredited investors.