While regulators in the US, the UK and Europe have dragged their feet on crypto, Abu Dhabi has been quietly snagging a bit of business.
The emirate brought in its regulatory framework in 2018 – aeons ago in crypto time – and it’s worked a treat, with Binance, Kraken and others recently setting up shop there.
They look set to be joined by Standard Chartered’s crypto firm Zodia Markets, Financial News revealed this morning.
The exchange, which is aimed at institutional players, has already drafted an application to operate in Abu Dhabi, and plans to hand in a new one early next year after extended talks with regulators.
Abu Dhabi has turned to crypto – and financial innovation more broadly – in an effort to recast its economy and reduce reliance on oil and gas. That has meant setting the bar relatively low to allow firms to set up shop: The Financial Action Task Force recently said the United Arab Emirates wasn’t doing enough to counter money-laundering risks, something which has proven a sticking point in other countries such as the UK.
The UAE is now the fifth-largest crypto market in the Middle East behind Turkey, Lebanon, Saudi Arabia and Egypt, with a transaction volume of about $28bn, according to data from July 2021 to June 2022 compiled by Chainalysis.
Zodia Markets, meanwhile, is one part of a crypto double act set up by StanChart, which also started Zodia Custody last year. Zodia Markets is a partnership between SC Ventures, the innovation and ventures unit of StanChart, and BC Technology Group, a Hong Kong-based crypto firm.
In an interview with FN, Zodia Markets boss Usman Ahmad praised Abu Dhabi for being “forward-looking with respect to putting the regulatory framework in place”.
It probably doesn’t hurt that those regulations are eminently crypto-friendly, of course…
The best of the rest
Binance boss Changpeng ‘CZ’ Zhao said the crypto giant would sell its holdings of rival FTX’s token, FTT, after Coindesk reported that FTX chief Sam Bankman-Fried’s other crypto firm Alameda relied heavily on the token for its balance sheet. It has led to wider market reverberations and a Twitter spat between the two powerful bosses.
Fidelity announced on 3 November that it would allow individual investors to buy, sell, and hold bitcoin and ether through Fidelity Crypto, a brokerage service that puts crypto and traditional investments in one place. Investors will be able to invest as little as $1 and trading will be fee-free.
Crypto firms are stepping up US political donations ahead of the midterm elections, in an attempt to influence the current gridlock on regulating the sector. FTX executives alone have given nearly $70m to candidates from both parties during this election cycle, according to campaign-tracking nonprofit OpenSecrets.
Law enforcement officials in the US said they seized nearly $3.4bn in bitcoin from a property developer who scammed Silk Road, the dark web marketplace, in 2012. The crypto seizure, the Department of Justice’s second-largest ever, took place in 2021 in the home of James Zhong, a 32-year-old computer science graduate. Zhong was arrested and pleaded guilty to wire fraud on 3 November.
Time for a trade
Nomura is building a 50-strong team for its crypto spin-out, Laser Digital, and is aiming to start trading digital assets early next year.
Laser Digital’s first business line is a venture capital investment division, which will target the digital assets sector. Nomura is now hiring expertise and building an electronic trading platform to launch by April next year, executives told FN. The new firm aims to have around 50 employees by March 2023.
“We’ve been slightly fortunate to be building this in a crypto winter. It gives us the opportunity to find talent that is more available and at a more sensible price,” said Steven Ashley, Nomura’s former head of wholesale banking, now chair of Laser Digital.
“There was some craziness happening in the first few months of 2022, but we’re taking a longer view and it’s better to build out the business in the current climate.”
Our favourite stories from around the web
Crypto miners hit hard in digital asset industry’s downturn (Financial Times)
Now you can use crypto to buy your milk (The Times)
To contact the author of this story with feedback or news, email Alex Daniel