The story of Chinese people in the crypto industry is full of twists and turns. Chinese people have contributed to the booming crypto industry, but the current Chinese influence is somewhat drifting.
The crypto industry started in China and Japan around 2013, and then Hong Kong started to gain momentum. After the bankruptcy of Mt Gox in Japan in 2014, US dollar trading began to gain momentum in Hong Kong through Bitfinex. In 2016, Bitfinex became the largest non-RMB exchange. Bitfinex has the support of Greater China and has a close relationship with Tether, which also started in Hong Kong, and has provided a series of support. Mainland China was also the starting point of the crypto industry, and Ethereum founder Vitalik has also visited China many times to try to raise funds.
With the Bitcoin ban in mainland China, the mainland's giant companies have changed their business and opened up new paths elsewhere through buybacks, backdoor listings, etc. The mainland's Bitcoin ban has also had a great impact on Hong Kong's crypto community. Coupled with Hong Kong's once-criticized epidemic policy during the epidemic, a large number of new forces have since gone to Singapore.
Singapore is now the Web3 center of East Asia, but whether it will continue to be so in the future is still unknown.
In October 2022, the Asian Web3 held a grand event, Asia Token 2049. After attending the event at the beginning of the month, many people in the industry went to Dubai in the middle of the month to attend Gitex, the world's largest technology event, to see what cutting-edge projects were exhibited in the Blockchain Summit and Metaverse Pavilion. As Singapore tightens its policy on Web3 and Dubai relaxes its invitation policy, the booming Web3 industry in the Middle East and North Africa seems to be attracting people in the industry who are always in FOMO to come here to find a more suitable environment for swimming.
In the current wave of Web3 development, Dubai must be a force that cannot be underestimated. The political and economic development of this most famous emirate in the United Arab Emirates has benefited from the national policies of several extremely far-sighted presidents. Now it has invested a lot of money, relaxed policies, and built its own financial center and transportation hub by taking advantage of its convenient geographical location at the port of the Persian Gulf and near the Strait of Hormuz. Although its territory is not large, it has amazing soft power and can have its own important voice in the forefront. At present, Dubai is one of the fastest-growing destinations in the Web3 industry. As a resident of Dubai, I personally think that the UAE is the light of the Middle East and North Africa. Today, I will also use the platform of rhythm to talk to you about the development of Web3 in Dubai.
The legend of the trading port: a policy of taking advantage of small resources to achieve big goals and being the first in the world
Before the early 19th century, Dubai was a small fishing village. Because it was a port adjacent to Iran, it became a commercial station for trade to Persia, mainly engaged in fishing, shipbuilding, and pearling. In the 19th century, Dubai began to gradually undergo modernization and politically established good relations with its former arch-enemy Abu Dhabi. From the 19th century to the 1960s, before the discovery of oil and the formation of the UAE in the 1970s, Dubai had made a series of very far-sighted policy decisions. In 1833, Dubai was ruled by today's Al Maktoum family, which adopted a series of liberal policies. In 1901, the then Sheikh Maktoum bin Hasher Al Maktoum announced that Dubai would be a free trade port, with no taxes on imported and exported goods. Subsequent sheikhs also adopted such free trade policies. Before the discovery of oil, the family had built Dubai into an important port in the Persian Gulf with a high throughput. Also because Dubai is close to Iran, many Iranian businessmen traveled to the world through Dubai and eventually settled in Dubai.
In 1958, Rashid bin Saeed Al Maktoum took over as Sheikh, and under his leadership, Dubai developed from a pearling port into a splendid international metropolis and commercial center. The Sheikh's high-level policy instincts were a blessing to Dubai. In 1958, Dubai had not yet discovered oil, but the Sheikh had already begun to focus on economic diversification, using the surplus Dubai obtained from trade to reinvest in infrastructure, building natural water pipelines, expanding electricity, building hotels, and building airports. The Sheikh's infrastructure development was not always well-funded or recognized. When building the first bridge connecting Dubai Waterway, the Sheikh was short of money and borrowed money from his brother-in-law, the Qatari ruler, and repaid the loan with tolls after the bridge was opened.
In 1966, Dubai discovered oil underwater, and from then on, it embarked on a life of "a piece of cloth on the head, the richest in the world". But Dubai is lucky. Oil, which is a Pandora's box for most countries in the Middle East, has not destroyed Dubai's independence and development too much. Sheikh Rashid bin Saeed Al Maktoum once said a famous saying, "My grandfather rides a camel, my father rides a camel, I drive a Mercedes, my son drives a Land Rover, his son can drive a Land Rover, but his son can ride a camel", which reveals the exhaustibility of oil, a heavy resource. Therefore, the Maktoum family has been committed to using oil money to diversify the economy.
In 1971, Dubai joined Abu Dhabi, Sharjah and other countries to form the United Arab Emirates, which gave it a political peace of mind. Afterwards, under the leadership of the current sheikh's brother and the current sheikh, Mohammed bin Rashid Al Maktoum, Dubai continued to develop different industries. The current sheikh vigorously developed the real estate industry, and the royal industry and the Dubai government industry were often inseparable. After that, when Europe and the United States experienced stagflation due to the oil crisis in the 1970s, Dubai continued to develop. During this period, we saw the first bank of the UAE, the construction of hotels, beaches, bridges, etc. In the 1970s, oil revenue accounted for 24% of Dubai's GDP. By 2004, this proportion was only 7%.
After entering the 1990s, the UAE emerged from the Gulf War as a low-key winner, continuing to attract foreign businesses to settle in Dubai. The UAE has good relations with the West, trying to stay away from ideological shackles, and using the wave of Western liberalism to continue to attack the economy. Dubai is considered the Hong Kong of the Middle East, and its relationship with Iran is considered to be very similar to the relationship between Hong Kong and the mainland. Unlike Iran, the UAE also has a "talk of ideology, but business in mind", and its flexibility in actual policy operations is far greater than Iran.
Dubai will run out of oil in 2029. Led by some extremely politically forward-thinking (albeit patriarchal) people in power, Dubai is now making a big push into Web3 and the Metaverse, handing over an important part of the city’s economic diversification to this booming new industry.
In August 2022, the ruler of Dubai personally announced the Metaverse Strategy, which aims to further expand Dubai's influence in the Metaverse. Before the plan, 1,000 blockchain and Metaverse companies had chosen to take root in Dubai. After the plan, Dubai expects to add 30,000 virtual jobs by 2030, adding $4 billion in added value to Dubai's economy.
Advertisements placed by Web3 companies can be seen everywhere on the streets of Dubai. With Web3 user resources scarce today, companies are striving to attract every high-quality user in this land who has money, a smartphone, and a high level of Web3 acceptance.
Metaverse and Blockchain Regulation/Government Agencies in Dubai
The most important regulator in Dubai is the Virtual Assets and Regulatory Authority (VARA), which was established in March 2022 to issue licenses. VARA adopts a lightweight compliance model called Test-Adapt-Scale, and provides looser licensing supervision for virtual currency companies. Driven by VARA, Binance, FTX, crypto.com, Bybit, etc. have obtained licenses in Dubai and opened head offices or branches in Dubai. As India announced a 30% tax on virtual assets, Indian exchanges such as WazirX also moved to Dubai. BitOasis, an important exchange in the Middle East, also developed in Dubai with a VARA license. As early as May, VARA became the first regulator to hold land in the Metaverse, when it bought a piece of land through Sandbox. It can be seen that VARA dares to be the first to vigorously try the Metaverse and promote "borderless" trade.
It is worth noting that Dubai's senior management can basically speak fluent English with interesting wording and sentence structure on the basis of Arabic. I was fortunate to be invited to participate in many technical and economic activities in Dubai and listened to speeches by many senior officials. For example, during Gitex, I participated in some activities with Iranian government officials and UAE officials. At the event, Iranian senior officials/technology company bosses spoke English haltingly, while UAE officials spoke with standard pronunciation. Iranian bosses were drowsy while speaking, while UAE officials were able to bring participants into the bright "future" world. Similarly, when I worked in an international financial institution before, I also found that some senior officials from the mainland did not speak English well. I also came into contact with some Chinese VCs and projects in Dubai, and many of the trustees actually did not speak English or had a strong English accent. In comparison, the language advantage and innovation level of Dubai's government power is one of the great advantages of this city.
Dubai International Financial Centre (DIFC) is a force to be reckoned with in Dubai and an important neighborhood. DIFC has an incubator and ecosystem dedicated to FinTech incubation, FinTech Hive, which focuses on incubating and supporting innovations in payment methods to seize the rapidly booming FinTech market in the Middle East. In addition to incubating FinTech companies that are traditional in terms of transaction methods, FinTech Hive occasionally looks at cryptocurrency solutions that can effectively solve transaction problems. In January 2020, the current sheikh invested 1 billion dirhams to open the Dubai Future District Fund, which is under the DIFC Innovation Center and is used to invest in VC groups and startups that invest in Dubai's financial future.
Dubai Multi Commodities Centre (DMCC) is traditionally a free trade zone. Its branch DMCC Crypto Centre mainly supports the establishment and launch of blockchain companies in the Dubai Free Trade Zone, and has many favorable policies for developing companies in the free trade zone. Currently, DMCC has registered 460 local blockchain companies, which is more than 50% of the blockchain companies registered in Dubai. Thanks to the support of the Dubai government, Switzerland's well-known blockchain ecosystem Crypto Valley opened Crypto Oasis in the Middle East to explore local tokens in the Middle East, build an ecosystem, and connect the two major crypto centers of Switzerland and Dubai.
The Dubai Future Foundation was established in 2016. Its Dubai Future Museum is an important landmark building in Dubai. The fund currently has both hardware (construction) and soft power ecosystem building capabilities, with a series of detailed promoter projects, incubators, knowledge exchange platforms, etc., focusing on exploring leading technologies and finding the next "future" fashion, "future" football, "future" AI, "future" civil servants, etc. Founded in 2021, the UAE company BEDU (bedu.io) is a local company based in the metaverse. Its main business is to provide metaverse NFT content planning and consulting services, and the audit and development of smart contracts. The company announced a new plan, Project 2117, at a special event at the Future Museum, hoping to become a metaverse-wide ecosystem in the next decade and attract 100 million users to the metaverse. Some forward-looking projects can often take their fame to a higher level through the Dubai Future Museum.
The Dubai Chamber of Commerce and Industry, founded in 1965, is also vigorously promoting local trade and commerce, aiming to become the best trade and commerce bureau in the world by 2024. The Dubai Chamber of Commerce and Industry is indeed implementing it, hoping to achieve this vision. The Dubai Chamber of Digital Economy, a subsidiary of the Chamber of Commerce and Industry, recently announced the selection of 30 blockchain companies in Dubai to join the new Metaverse Education Program. Under the Chamber of Commerce and Industry, the Dubai Business Women Council was also established to support female entrepreneurs.
In addition to these government-backed organizations, there are many large and small, well-funded organizations within the Web3 ecosystem in Dubai and Abu Dhabi.
In addition to government support in cryptocurrency, the Dubai government is also known for its openness in business technology development. The government adopts the "sandbox testing" sandbox testing model to test promising projects in a sandbox environment isolated from the regulatory layer. Therefore, the approval and support projects are highly efficient and have a high degree of freedom.
Web3 Geopolitics in Dubai
Dubai, which has a large number of Indian immigrants, is jokingly called "India's Web3 capital" by Indian Web3 entrepreneurs. The Indian government's attitude towards the cryptocurrency industry is wavering, and the high taxes on crypto players have caused a large number of Indian Web3 to flee India. On April 1, 2022, India imposed a 30% income tax on all cryptocurrency revenues, and on July 1, it imposed an additional 1% tax on buyers of electronic assets. In general, although India has not explicitly banned the development of the crypto industry, different officials have more or less hawkish remarks in different environments, making the Indian Web3 community feel the regulatory pressure is increasing.
There are many cheap flights from Dubai to India, and the flight distance is also medium.
In contrast to India, Dubai, which is only more than 2 hours away from Mumbai by plane, not only has a relaxed visa policy and convenient transportation, but also does not impose additional taxes on the Web3 industry. Instead, the government has put out real money to support the construction of Web3 infrastructure and introduced visa policies that are conducive to the landing of talents. Sandeep Nailwal, an Indian co-founder of Polygon, said that India's Web3 talent loss is serious. Polygon's early investor is Sequoia Capital India. Sandeep Nailwal said that he did not want to leave India and hoped to help build a better Web3 platform in India, but under the current chaotic regulatory environment, he had to leave and chose to move to Dubai in 2020.
In the article in which CoinYuppie talked to the founders of Astar, the founders said that the favorable policies of Portugal, Dubai and other countries are attracting a large number of talents. Due to Japan's high taxes, more Japanese Web3 entrepreneurs also choose to go to Switzerland, Singapore, Dubai and other places. Previously, Japan's Financial Services Agency announced that it would impose a 30% corporate tax on the company's cryptocurrency assets, including unrealized income, which means that once a token enters the public market, it will be taxed even if the token does not generate income.
On September 30, the Chief Fintech Officer of the Monetary Authority of Singapore said in response to the Asia Token 2049 project promotion that it would severely crack down on cryptocurrency speculation. As Singapore tightens its regulation on cryptocurrencies, will Chinese cryptocurrency practitioners and companies choose to move to Dubai? The author currently knows that many companies and friends in the industry are actively planning to set up branches in Dubai in addition to setting up branches in Singapore. It seems that the siphoning power of Dubai's loose policy will attract players who first landed in Singapore to Dubai again.
The author attended an industry event in Dubai and quoted a GameFi industry executive who said that Singapore is good at finance, but not at projects. Few VCs can afford to invest in projects in Singapore. You still have to come to Dubai to do projects. The author works in Dubai and goes to large and small events every week. He has indeed discovered some Chinese entrepreneurial projects, starting from the Middle East to Asia, and then consolidating American and European users. In Dubai, the Chinese are also a very large group of about 200,000 people. Even if you don’t speak English, you can still have a good life in Dubai and do projects here. Due to the popularity of UnionPay and the rapid development of FinTech in the Middle East, you can swipe UnionPay cards everywhere in Dubai, and cryptocurrencies can also be used in many places.
In addition, starting from Dubai, it is also very easy for cryptocurrency practitioners to travel to other cryptocurrency centers such as Singapore, Switzerland, Portugal, Hong Kong, and North America for meetings with the help of Emirates, the world's largest airline.
Reference
https://mediaoffice.ae/en/news/2022/August/02-08/Dubai-consolidates-its-status
https://www.animocabrands.com/dubais-vara-enters-the-sandbox-and-becomes-first-asset-regulator-with-a-metaverse-hq
https://cryptooasis.ae/about
https://gulfnews.com/business/corporate-news/dubai-web3-firm-bedu-expands-its-services-and-team-1.1660138146278
https://gulfbusiness.com/dubai-based-metaverse-solution-provider-bedu-launches-operations/
https://www.business2community.com/cryptocurrency/best-dubai-cryptocurrency-projects
https://www.moneycontrol.com/news/business/cryptocurrency/the-new-brain-drain-indian-web3-startups-flock-to-dubai-amid-regulatory-uncertainty-stiff-taxes-8378361.html
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