Blockchain infrastructure company Blockdaemon has announced its expansion into the Middle East with the opening of a new office and entity in Abu Dhabi, United Arab Emirates. The move, approved by the Abu Dhabi Global Market (ADGM) Registration Authority, aligns with Blockdaemon's strategy to provide Web3 infrastructure solutions locally and offer its node and validator infrastructure solutions in the UAE, along with its self-hosted MPC wallet technology.

The expansion highlights Abu Dhabi's growing reputation as a global hub for blockchain and virtual asset companies. The UAE has been actively creating a regulatory environment to attract digital asset businesses, with Abu Dhabi and Dubai leading the charge.

Abu Dhabi's Regulatory Framework Attracts Crypto Firms

Abu Dhabi Global Market (ADGM), an international financial center and free zone, has established a comprehensive regulatory framework for virtual assets since 2018. The ADGM's Financial Services Regulatory Authority (FSRA) introduced a bespoke framework for the regulation of exchanges, custodians, brokers, and other intermediaries engaged in virtual asset activities.

Dubai has also been proactive in creating a regulatory environment conducive to blockchain and crypto companies. The Dubai Virtual Asset Regulatory Authority (VARA) was established in 2021 to oversee the regulation of virtual asset activities in the emirate.

This clear regulatory environment has drawn several prominent blockchain and crypto companies to the region, including Binance, which recently obtained a license from Dubai's VARA for full operations in the emirate.

UAE's Crypto Transactions Surge Amid Regulatory Clarity

The value of cryptocurrency transactions received by the UAE reached nearly $35 billion between July 2022 and June 2023, despite a 17% drop compared to the previous year, according to a report by Chainalysis. The UAE's crypto market fared better than many other countries in the region, with Saudi Arabia being one of the few to see year-over-year transaction volume growth.

The report also found that 67% of cryptocurrency transactions in the UAE during this period were driven by institutional investments exceeding $1 million, followed by professional investments ($10,000 to $1 million), indicating market confidence in the country's regulatory efforts.

Collaborations and Initiatives Drive Web3 Adoption

Abu Dhabi has seen several collaborations and initiatives aimed at driving the adoption of blockchain and Web3 technologies. The ADGM recently partnered with the Solana Foundation to explore joint projects and stimulate industry engagement, essential for developing regulatory frameworks and promoting Abu Dhabi's blockchain and Web3 ecosystem.

Additionally, the ADGM introduced the DLT Foundations Regulations, a pioneering regulatory framework designed specifically for Blockchain Foundations and Decentralized Autonomous Organizations (DAOs).

Mastercard has also partnered with Further Ventures, a venture building and investment firm based in Abu Dhabi, to accelerate the development of local fintech capabilities in the UAE and the wider MENA region. The collaboration aims to support innovative startups and promote inclusive, need-driven innovation in the region.

Abu Dhabi Virtual Asset Hub

Abu Dhabi's rise as a global blockchain and virtual asset hub is driven by its innovative regulatory framework, attracting prominent companies like Blockdaemon to establish a presence in the emirate. With a surge in cryptocurrency transactions and collaborations fostering Web3 adoption, the UAE is positioning itself as a leader in the digital asset space, even as other jurisdictions grapple with regulatory challenges.

As the global blockchain and crypto landscape continues to evolve, Abu Dhabi's proactive approach to regulation and its growing ecosystem of digital asset providers may serve as a model for other jurisdictions seeking to embrace the potential of Web3 technologies while ensuring investor protection and market integrity. Abu Dhabi is quickly becoming a virtual asset hub.