Cryptocurrency and Blockchain in Dubai - How to Buy Real Estate with Bitcoin and How this Technology Has Impacted the Emirate's Economy and Country

Cryptocurrency traders, crypto investors, IT businesses that want to avoid tedious accounting, mining and staking specialists, and NFT designers are flocking to Dubai. The emirate is pro-actively creating a comfortable environment for these specialists to do business and enjoy life. All of this is not in vain - in recent years, Dubai has seen an influx in IT sector leaders moving their branches and offices there, in addition to actively searching for specialists and businesses.

Government Regulation and Legal Mechanisms

The regulation of cryptocurrencies and blockchain projects in the UAE is carried out by the Financial Services Regulatory Authority (FSRA) in relation to the Abu Dhabi Global Market (ADGM). This body publishes a cryptocurrency guide. It also monitors blockchain businesses to ensure transparency, prevent money laundering and the financing of terrorism. In the future, the Securities and Commodities Authority (SCA) and the Dubai Financial Services Authority (DFSA) will also contribute to the regulation of cryptocurrencies in the UAE.

The current regulatory framework in the UAE regulates processes related to storage, use, issuance, and trading of investment tokens. Consultancy and insurance services in this area are also government-controlled.

Official control over the legal mechanisms of digital assets is carried out based on the provisions from March 2022. For this purpose, a special agency - The Dubai Virtual Asset Regulatory Authority (VARA) - has been established. It sets common rules for using cryptocurrency and issues any necessary licenses. All companies and freelancers who engage in the exchange, transfer, storage, or trading of cryptocurrency, as well as manage portfolios or support platforms, are required to obtain licenses.

The tax legislation of the state is also very advantageous. All tax residents of Dubai, regardless of income, do not pay income tax. This applies to cryptocurrencies as well. Since September 2021, digital currencies have been exempted from taxation in the free zones. Thus, the state attracts IT businesses and specialists in this field for further digitalization development.

Important! Starting June 1st, 2023, companies operating strictly within the territory of the UAE with a yearly income exceeding AED 3M (USD 817K) must pay a corporate tax of 9%.

Additional benefits for members of the IT sector include:

1. Security and ease of doing business.
2. No reporting required.
3. Complete confidentiality of information.
4. Ease of obtaining a freelance visa.
5. Transparency of foreign currency transfer systems.
6. Permission for full foreign ownership of businesses.
7. Considered the leader in flexible settings and global coverage of clients/partners.
8. Possibility to expand business connections and commerce due to the advantageous geographical location.
9. Developed infrastructure, positive attitude towards blockchain technology, and complete digitization of legal matters.

As part of the UAE's radical digital transformation, blockchain technology is being used to transform government transactions at the federal level. Almost all sectors, from energy to media, are studying and implementing blockchain and DLT (distributed ledger technologies).

As early as 2016, the UAE government began implementing blockchain systems in all sectors of the economy, as well as in accounting and reporting. Not only can expensive cars and real estate be purchased with BTC, but utility bills and other real estate-related payments can also be made with digital currency.

New industries and an international platform are being created which will expand cooperation around the world. To achieve this, legislation is being simplified and ministries are increasing their online presence. Dubai is among the leaders in the application of blockchain and cryptocurrency.

Dubai's Results

The Dubai Blockchain Strategy was launched in 2016 as a result of the collaboration between the Smart Dubai government initiative and the Dubai Future Foundation. As part of the strategy, the first roadmap for the implementation of blockchain systems in the emirate was presented. Blockchain is applied as part of the emirate's development strategy, the goal of which is to make Dubai the happiest city in the world. The fundamental idea is to create a "smart city" and a comfortable environment for everyone.

From 2016 to 2019, blockchain programs were launched in Dubai. These new developments are aimed at improving the quality of work done by the state structures in various areas. The DLD was one of the first to implement such a program. Among the advantages are transparency, security of transmission, and the ability to track versions of documents on property rights registration. In the future, Dubai aims to completely get rid of paper documentation.

In 2021, Sheikh Mohammed bin Rashid Al Maktoum founded Digital Dubai to develop and oversee policies and strategies related to information technology, data, digital transformation, and cybersecurity in Dubai.

Digital Dubai is an organization that combines four entities - Dubai Electronic Security Center (DESC), Dubai Statistics Center (DSC), Dubai Data Establishment (DDE), and Smart Dubai Government Establishment. Each entity is responsible for its own separate field of activity.

DESC implements the values outlined in Dubai's Cybersecurity Strategy, which focuses on five key areas:

• Maintaining a safe digital environment;
• Preserving the flexibility and free flow of information in cyberspace;
• Ensuring the continuity of IT systems;
• Advancing research;
• Promoting innovation in the field of cybersecurity.

Other goals include increasing awareness in the community and encouraging people to be more vigilant about digital threats.

DSC collects and analyzes statistics on many aspects of life in Dubai, from tourism to assessing the happiness of the population. These data allow for qualitative and quantitative research that meets international standards, does not violate confidentiality, and is used to improve the quality of life for residents and citizens.

DDE aims to create a comprehensive information ecosystem in the city. To achieve this, the organization focuses on these four main areas:

• Data management;
• Infrastructure and data architecture;
• Interaction with the ecosystem;
• Value creation.

Over the past 5 years, DDE has issued policies and recommendations on data exchange, published ethical guidelines for AI implementation, built Dubai Pulse, and launched the Private Sector Engagement Strategy. This urban data network now contains over 700 open and shared information datasets. DDE participated in the creation of the COVID-19 City Information Panel in collaboration with the Dubai COVID-19 Command and Control Center.

Smart Dubai has brought together the city government's efforts in digital management, and is now responsible for the central common services and infrastructure platform of the Dubai government, known as Government Resource Planning Systems (GRPS). GRPS integrates more than 40 systems and over 71,000 Dubai government employees. Some of the landmark products and services launched by Smart Dubai over the past two decades include Dubai Pay, Smart Employee, Smart Supplier, UAE PASS, Dubai Now, Dubai Blockchain Strategy, and Dubai Artificial Intelligence Lab. The office has announced the launch of the Dubai Blockchain Platform, the first government-supported platform that will transfer and digitize applicable government processes and services for citizens. According to the Sheikh, "The implementation of Dubai blockchain technology can save AED 5.5B (USD 1.5B) annually on document processing alone, which is equivalent to the cost of one Burj Khalifa each year."

Since May 2022, a special strategic plan for developing the metaverse has been implemented in Dubai. The project involves creating over 40,000 jobs. The active development of the metaverse is planned to bring in AED 14.7B (USD 4B) to Dubai's economy by 2030. Already, high-tech businesses contribute AED 1.8B (USD 500M) to Dubai's economy annually. It is expected that these figures will significantly increase in the near future. Dubai aims to lead the way in blockchain development, which is valued by local and international companies that also actively use blockchain. These companies include:

DP World

DP World is a global leader in solutions for global supply chains, operating in 46 countries. It specializes in cargo logistics, port terminal operations, maritime services, and much more. The shipping and logistics industry is still slow to change and heavily relies on complex documents to manage goods and financial calculations. DP World is actively exploring new solutions and technologies to address these issues, including the ability to easily exchange data and automate processes through open APIs and smart contracts.

The company's goals are to streamline the customer registration process and digitize and secure trade documentation. The implementation of blockchain technology into the company's workflow has brought many benefits, including providing a single window for all processes, which helped eliminate duplicate processes in organizations. It also maintained close ties and positive relationships with stakeholders.

Emirates Airlines

Emirates Airlines is the world's largest international airline with a global network of 159 destinations in 85 countries on 6 continents. The company wanted to explore the potential of using blockchain to improve its Skywards loyalty program by reducing the time and cost of attracting loyal partners.

From a technical perspective, the goal was not to replace the existing architecture, but to supplement it. Partners will continue to use their existing software but connect through blockchain to manage accounting and payment systems. After demonstrating the value of the application, the decision was made to fully implement the solution in March 2019. After transitioning to production, the project has yielded several positive results. This has led to greater transparency between Emirates Skywards and its partners, increased security, and reduced levels of fraud.

Emirates NBD 

Emirates NBD is a state-owned bank in Dubai and a leading banking group in the Middle East, recognized as one of the largest in terms of assets. The owners intended to explore ways in which technology could be applied to create real deposits and improve the security system. In 2016, the company tested blockchain for cross-border transactions and trade finance documentation in partnership with ICICI Bank in India.

Subsequently, the Emirates NBD team decided to use blockchain to tackle the massive problem of check fraud. In just the first month of launching blockchain in early 2017, Emirates NBD registered nearly a million blockchain checks. From January to November 2019, the network verified over 35 million checks. In addition, since its launch in March 2018, the number of check fraud cases has decreased by 99%. The concept led the bank to create a digital financial instrument with a legal basis: the e-cheque.

Emirates NBD is participating in the "Know Your Customer" (KYC) consortium based on blockchain technology. This is a joint project with banks such as Emirates Islamic, HSBC, RAK Bank, Abu Dhabi Commercial Bank (ADCB) and Commercial Bank of Dubai (CBD). The project aims to exchange reliable information between banks and government bodies issuing business licenses in the UAE.

The initiative will allow for a faster and more efficient exchange of digital data and documents online by using blockchain. The project aims to attract new investors to Dubai. Companies will be able to instantly open a digital bank account, which will facilitate business operations. The initiative has been operational since the first quarter of 2020, after which other financial institutions and licensing authorities were able to join.

Etisalat Digital

Etisalat Digital, the business unit of Etisalat, is driving the digital revolution and transformation. This enables enterprises and governments to become "smarter" by using the latest technologies. The lack of digitization and data verification mechanisms in different banks has led to significant fraud risk in transactions. Small- and medium-sized enterprises trade finances through invoice discounting, a growing business that requires control to avoid risk to creditors when duplicating these invoices. This is causing growing concern as multiple banks may ultimately finance the same invoice, and fraudulent invoices may arise due to the lack of communication between these banks.

To address the problem of fraud when duplicate invoices were financed, in June 2019, Etisalat Digital announced a new platform called UAE Trade Connect (UTC). UTC brought together eight major UAE banks. The founding members of the UTC network aimed to apply blockchain as a verification layer to detect fraud in invoice financing through a shared blockchain network while maintaining the confidentiality of information about each bank's customers. This helped uncover approximately 3.75 million fraudulent transactions in the UAE annually, representing AED 1.6B (USD 435M) in potential losses.

Conferences and Startups

Everyone who deals with the blockchain and cryptocurrency sector knows that many popular conferences take place in Dubai. The Blockchain Life 2023 forum was held in the emirate on February 27-28, 2023. For two days, specialists, visitors, and businessmen discussed the prospects of the industry, its achievements, and market novelties. The UAE has shown itself as one of the leaders. It is not in vain that in recent years, the Emirates have been attracting crypto assets to the country. Since the creation of VARA in 2022, well-known banks such as SEBA and Sygnum, as well as cryptocurrency exchanges like Binance, have established their branches in Dubai. Looking at the positive experience, it can be said that Dubai has one of the most favorable cryptocurrency environments in the world.

The main topic of the forum was that of regulation. Particpants engaged in discussions regarding the prospects of the sector in Dubai, where significant changes in the system are coming in order to better avoid scams and fraud.

Dubai will be hosting at least three more events this year: Crypto Expo Dubai on September 25-27, Blockchain Economy Global on October 4-5, and Blockchain Life 2023 on October 24-25.

As for startups, the Canadian platform MaskEx has chosen the emirate as the location for its headquarters. The company is a cryptocurrency exchange and wallet platform. Among other startups that have made their home in Dubai are Emcredit, Evareium, and Loyyal, to name a few. The latter is collaborating with Smart Dubai to develop a crypto-stimulus program and applications. In 2018, Espeo Blockchain, a consulting brand of Espeo Software, chose to open an office in Dubai, citing the region's growth potential and interest in blockchain technology as its motivating factors.

Important! Companies and government agencies in the region are currently forced look elsewhere for specialists and expertise or turn to one of the very few local blockchain providers.

What can crypto buy in Dubai

The use of digital currency is quite high in Dubai. It can be used to pay for anything from a hotel room to groceries and more. In 2022, the YallaMarket delivery service announced that it will accept digital currency for payment through its mobile application. Customers can pay for their YallaMarket purchases with USDT and USDC stablecoins.

Bake N More, a cafe in Dubai, has become the first F&B establishment to accept cryptocurrencies as payment.

The automotive market is also not far behind and now provides the opportunity to buy a car with cryptocurrency. There are even special cryptocurrency exchanges specializing in the sale of cars.

Important! The Dubai Department of Innovation tried to release emCash, Dubai's own cryptocurrency, into circulation back in April 2020. However, the government was not satisfied with the results, and the project was cut.

The most common use of digital currency in the emirate is to buy real estate. The process is quite easy - contact an agency and choose a property that meets your needs and budget. Once a property is chosen, the transaction and Bitcoin payment can be made through a realtor.

The largest and most well-known real estate developers in the UAE who work with cryptocurrency are:

• Emaar Properties;
• Meraas;
• Select Group;
• Nakheel;
• Dubai Properties;
• DAMAC Properties.

It is not possible to directly contact the developer in regards to making a purchase with a cryptocurrency. Companies only conduct deals with licensed traders and brokers. There are various projects available that can be purchased with digital currency. These include Emaar Beachfront by Emaar Properties, The Palm Tower by Nakheel, Bulgari Resorts & Residences by Meraas, Port De La Mer by Meraas, Cavalli Tower by DAMAC Properties, and many more.

Dubai is one of many cities in the world where the government sees the benefits of blockchain technology and further digitization of its processes and procedures. The advantages are countless: technology can help protect data, improve operations, and stop fraud, waste, and abuse in government services while increasing accountability and strengthening trust. In the emirate, these benefits are well-understood and officials are striving to develop these technologies by creating ideal conditions and attracting businesses and specialists from all over the world.