The Big Whale: Can you introduce yourself?
Marwan Alzarouni: I am the CEO of the Dubai Blockchain Center, an impact based center aimed at coordinating and fostering innovation. I am also a strategic advisor to the Department of Economy and Tourism for the government. My main role is to contribute to the emergence of a local start-up ecosystem and to convince the biggest players in the sector to come and set up here.
There's been a lot going on in Dubai in recent months. When did the emirate's pro-crypto strategy begin?
When we launched the Dubai Blockchain Center in 2018, the aim was to find out as much as possible about the use cases that could emerge in the near future. So it was mainly for the purposes of prospecting and education. At the time, only Bitcoin and Ethereum were beginning to emerge.
It was from 2020 onwards, with the emergence of decentralised finance and use cases that went beyond mere speculation, that we began to establish a roadmap. We have seen significant signs of adoption with the creation of new wallets, an increase in the use of stablecoins, or growing interest from financial institutions around the world. We are also seeing a transfer of talent from traditional finance to crypto. This is a reality.
Can you elaborate on your strategy?
By 2033, we want to double the size of our economy, and crypto can help us achieve this goal. With this in mind, we want to make Dubai one of the leading technology hubs for blockchain and crypto. This involves a drastic selection of projects.
To achieve this, Dubai launched the VARA (Virtual Assets Regulatory Authority) in February 2022 to create a specific framework, as we believe that the regulation of the traditional financial system cannot be applied to the crypto sector. The idea is to move forward step by step by talking to the players who want to set up in Dubai to find out what their needs are and to create specific regulation for each type of activity.
According to the feedback we're getting, the local ecosystem is still struggling to emerge...
We're just getting started. The first licence awarded by VARA was only issued last July. But a number of leading players have already chosen to set up here, including Crypto[.]com and Bybit.
The aim is to do everything we can to create a dynamic ecosystem. To do this, we want to attract as much capital as possible and talent from all over the world by offering them the best possible working environment. We expect them to become residents, not just tourists.
From a European perspective, your regulations are perceived as lighter. How do you perceive this?
Everyone has their own interpretation of things. We have opted for dynamic regulation that will be strengthened as the ecosystem develops. This doesn't mean that there are no controls, far from it. We want to establish our own rules, our own control tools, and that takes time. Moreover, VARA’s regulations are designed to be passportable to regions with advanced regulations, empowered by several rulebooks with extensive technical control sets.
The result of all this is that today the biggest exchange platforms are seriously thinking of setting up their global headquarters in Dubai, and more and more developers are joining us. We are also an important venue for ecosystem conferences. It's always better to open discussions, not close them. That's the sense of what we're doing at the moment.
Does tougher regulation elsewhere in the world favor you?
We don't see crypto development as a zero-sum game and don't see other jurisdictions as competitors. In fact, we are actively collaborating with many of them in Europe or Asia. Crypto was designed to be global, and common standards will be needed for the sector to develop in any case. In the long term, one of our objectives is to align our regulatory framework with that of other jurisdictions.
How did you react to the sanction imposed by the US authorities on Binance , whose stronghold is now Dubai?
As you can imagine, I cannot comment on an ongoing case. Generally speaking, VARA obviously cooperates with the authorities in other jurisdictions where necessary. There are often cases of this type in the financial sector. The last one was particularly high-profile because it involved the market's largest trading platform. But what is said in the media is not an indicator for us.
With the various regulatory frameworks emerging, some players will no longer be able to operate in certain jurisdictions, such as Tether in Europe. Is this an opportunity for Dubai?
As I said, crypto won't develop without global standards, so it's never good news to see a player of such importance no longer able to operate somewhere.
After that, what's certain is that crypto was designed to play an important role in regions that don't have sufficient access to basic financial services. It will therefore have a significant impact and offers hope, particularly in Africa, where its benefits are more easily identified than in parts of the world where there are already successful financial systems.
It's obviously complicated to predict the future, but what is certain is that the development of cryptos and blockchain is already having an impact on virtually every part of the traditional economy. I don't think crypto will replace the traditional financial system but will be fully integrated into it in the future.
