Free-zone licensing company Kiklabb is the first to start accepting bitcoin, marking a shift in the emirate’s cautious approach to cryptos.
BITCOIN SURGED TO record levels during the pandemic, making investors and entrepreneurs increasingly bullish about the future of cryptocurrency. Now, a Dubai government-owned entity is joining the fun.
Kiklabb, which is owned by Dubai’s Ports, Customs and Free Zone Corporation, announced Tuesday that it now allows hopeful entrepreneurs to pay for their trade licenses and visa fees with bitcoin, Ethereum, or tether. As the first government-owned licensing company in the UAE to accept cryptocurrency—“and certainly not the last,” says Kiklabb CEO Tasawar Ulhaq—the announcement marks a significant milestone for the city, as Gulf nations race to adopt digital payments and entice fintech startups to set up shop within their borders.
Ulhaq says the move to offer digital payments was prompted by a question from one of his tech-savvy customers, and predicts that many native digital tech companies will opt to use cryptocurrency, as a byproduct of signing smart contracts or otherwise conducting their businesses online.
Kiklabb isn’t the only firm betting on a crypto-renaissance. Bitcoin and other digital currencies were long shunned by mainstream financial firms, and have only gradually entered the market as an asset vehicle. But as bitcoin’s value surged in recent months, mainstream US companies have begun betting on the digital coin. The most extravagant of these announcements was that of Tesla CEO Elon Musk, who recently announced that customers could now pay for their Teslas in bitcoin—and invested $1.5 billion in the currency, sending its value soaring.
But Kiklabb’s announcement may also be influenced by dynamics that lie closer home. As Gulf nations look to attract startups to their countries and gain a greater share of the global fintech market (expected to be valued at $310 billion in 2022), they have moved to provide funding, physical workspaces, and drafted innovative financial regulation.
So far, the tiny island nation of Bahrain seems to have led the Gulf’s march toward embracing cryptocurrency, through licensing the region’s first fully cryptocurrency brokerage, Rain. Abu Dhabi, the UAE’s capital, also became attractive to cryptocurrency companies since it began regulating digital assets in 2018.
Yet until recently, Dubai stayed away from regulating digital payments and allowing cryptocurrency to gain full legitimacy.
Instead, the emirate doubled down on adopting cryptocurrency’s underlying technology, blockchain, by launching a Global Blockchain Council in 2016 and assigning another entity, Smart Dubai, to work on multiple use cases. A recent estimate given by Dubai authorities said that going paperless could help the government save $1.5 billion in processing visa applications, bill payments, and other administrative costs.
In recent months, the city signaled a change in attitude to cryptocurrency. Last month, the Dubai Financial Services Authority, which regulates Dubai’s main financial free zone, announced that it would draw up a framework for regulating digital assets, including cryptocurrencies.
Kiklabb’s announcement marks another shift toward a more crypto-friendly Dubai in the future. And international players on the fintech market are already eager to do business, according to Ulhaq.
“We’re in talks with high-profile players in the cryptocurrency sector who are exploring entry into Dubai,” he says. “Our vision is to not just [to] follow future digital currency trends, but also [to] set them.”