UAE Crypto Market to See Major Uptick With Several Ventures Gearing Up to Launch Spot Bitcoin ETFS
The cryptocurrency sector in the UAE and the larger Middle East could soon see a major uptick with several asset managing ventures gearing up to launch spot bitcoin ETFs (exchange traded funds) in the wake of a US court ruling last week, clearing regulatory hurdles for trading of such products.
The US Court of Appeals for the District of Columbia Circuit last Tuesday ruled in favour of Grayscale, a cryptocurrency investment firm, in a lawsuit against the Securities and Exchange Commission (SEC) on the US regulator’s rejection of the firm’s request to convert its Bitcoin Trust into an ETF.
The favourable court ruling could not only set a precedent for other firms seeking to launch bitcoin ETFs, but could see asset management companies – even including the likes of financial giants like BlackRock and Fidelity – to launch spot ETF products in other markets, including the UAE and the Middle East.
Spot bitcoin ETFs involve trading the ETF on traditional stock exchanges, with the actual bitcoin holdings maintained by a brokerage.
This structure will enable investors to take exposure in the leading cryptocurrency without the need to hold the digital assets themselves.
UAE spot bitcoin ETF will hinge on VARA approval
Industry insiders said the successful launch of spot ETFs in the UAE – and the Middle East – will hinge largely on the regulatory response from the Dubai regulator VARA (Virtual Asset Regulatory Authority).
Manhar Garegrat, Country Head, India & Global Partnerships at Liminal, a Singapore-based wallet infrastructure and custody solutions platform which has major operations in the UAE, said the Grayscale ruling will provide a much-needed boost to the digital asset industry in the UAE and the wider Middle East region.
“The introduction of spot ETF in the Middle East will have a dual benefit. First, it will legitimise the digital asset industry and make it more attractive to institutional investors. Second, it will increase liquidity and transparency in the digital asset markets, making it easier for investors to participate in the growth of the industry,” Garegrat.
He said the UAE and other Middle East markets are home to a large and growing number of digital asset investors, who are eager to access spot bitcoin ETFs.
“If approved [by VAEA], Family Offices and funds from around the world will have access to a regulated digital asset financial product to invest their wealth in a truly borderless and international asset class,” Garegrat said.
Industry experts hail the court ruling
Several crypto industry experts described last week’s US court ruling as “one of the most significant developments in the digital asset industry in the past decade”.
Mahin Gupta, Founder of Liminal, hailed the US court’s decision to overturn the SEC’s denial of Grayscale’s spot bitcoin ETF application, saying this is a clear sign that the regulatory landscape for digital assets is evolving in a positive direction.
“The approval of a spot bitcoin ETF will accelerate the adoption of digital assets by institutional investors and create a new demand for secure and compliant custody solutions,” .
Shivam Thakral, CEO of BuyUcoin, India’s second longest-running digital asset exchange, said the positive impact of the court ruling is already visible, with the bitcoin price hitting 2-week high as soon as the news became public.
“The wave of positive developments around the crypto industry has come as a fresh lease of life for the crypto industry which has been battling hostile regulations, dampened investor mood, and crypto winter,” Thakral.
“We are optimistic that Grayscale getting court approval for the bitcoin ETF will work as a template for similar financial products around the world,” he said.
Denis Sklyarov, Co-Founder and CEO of WiFi Map, the New York-headquartered crypto centric DeWi app, said the court ruling showcases the growing recognition of digital assets as a legitimate and evolving investment class.
“As the crypto space continues to gain regulatory clarity, investor confidence is likely to increase, leading to a broader adoption of cryptocurrencies and related financial products,” Sklyarov, adding that this milestone highlights the potential acceleration of crypto’s mainstream acceptance, fostering a more mature and thriving ecosystem.
