This year, Kraken, the US-headquartered crypto exchange, became the first global cryptocurrency exchange to receive a Financial Services Permission (FSP) license to operate a regulated virtual asset exchange platform in Abu Dhabi Global Market (ADGM), the UAE capital’s international financial centre.
Founded in 2011, Kraken is one of the premier crypto exchanges in the world, and its expansion to Abu Dhabi is a major boost to the Web3 sector in the Gulf nation, especially given that Kraken will be the country’s first global virtual assets exchange group to offer investors the ability to invest, trade, withdraw and deposit virtual assets (Bitcoin and Ether) directly in dirhams, the local currency.
Overall, we are seeing a major drive in the Web3 space in the UAE. For its part, ADGM made headlines when it introduced the world’s ﬁrst comprehensive and robust virtual asset regulatory framework in 2018. Dubai followed suit this year, with the launch of the Dubai Virtual Assets Regulatory Authority at DIFC.
Benjamin Ampen, Managing Director at Kraken MENA, shares some insights with the Abu Dhabi SME Hub about the company’s new Abu Dhabi office, incorporating the AED currency within its exchange, and more.
Benjamin Ampen, Managing Director at Kraken MENA
When deciding to expand to the Middle East, why was Abu Dhabi your destination of choice?
The UAE has an ambitious and compelling crypto strategy. Adoption has been fluid and fast-moving, evidenced by the UAE government itself introducing the use of blockchain technology for its transactions, supported by The Emirates Blockchain Strategy. Abu Dhabi has made great strides to become the global crypto hub, through well-thought-out legislation and an internationally respected and visionary authority in the form of the Abu Dhabi Global Market (ADGM) and its Virtual Assets Regulatory Framework, which continues to accelerate innovation and encourage adoption.
In this light, Abu Dhabi is a natural fit for Kraken and a strategically pivotal market as we continue to scale our global growth plans. As the first fully regulated global exchange to enable local investors to purchase crypto directly with the AED, we will increase activity, adoption, investment flows, and most importantly awareness of the UAE’s status as a rapidly accelerating global crypto marketplace, with Abu Dhabi and ADGM as the engine room powering this growth.
What’s your take on the overall regulatory framework for trading virtual assets in ADGM?
ADGM’s Virtual Asset Framework is a great example of how regulators globally should approach crypto. With respect to Kraken, they have emerged as an instrumental partner as we launch AED crypto trading in the UAE. Their scale, prestige and internationally recognized reputation as a robust financial services centre combined with the continued adaption and iteration of their framework, makes ADGM a global pioneer for progressive, visionary virtual asset regulation.
Together with the ADGM, we are excited to continue to increase access and awareness of the crypto space. We want to build a clear understanding of the fundamentals around crypto
– education and simplification will be key for adoption, and a sustainable adoption at that. We want to play an active role in building this understanding, and ADGM is an ideal partner to achieve this. With them, we aim to foster further entrepreneurship and fintech innovation in the region.
How important was it for Kraken to offer crypto trading in dirhams? Do you believe this will help reduce the barriers to entry to this relatively novel field?
Kraken will be the first fully regulated global exchange to offer our UAE clients friction-free access to crypto with AED trading pairs.
The benefit of this cannot be overstated: UAE clients already use Kraken to transact over a billion dollars in trading volume and that’s without a direct fiat onramp. The launch of AED trading pairs will enable Kraken to plug directly into the UAE’s liquid capital markets, enabling local investors to avoid costly, onerous, time-consuming foreign exchange fees and clearing the way for affordable, open, friction-free trading.
In doing so, Kraken will enable regional investors to gain direct access to the virtual asset class on the same level as their global peers. Crypto trading in dirhams will also accelerate the UAE’s bid for much greater diversification and will help attract greater foreign investment flows into the country.
What potential for crypto trading do you foresee in the UAE and the overall Middle East, and is trading in local currencies something you want to push to other countries regionally?
As a region, the Middle East is one of the fastest-growing markets for crypto. A recent Gemini survey found more than 35 per cent of Emiratis already own some form of cryptocurrency, making the UAE the third biggest country in the world in terms of crypto adoption. Likewise, trust is growing and yielding more mainstream interest - a recent YouGov UAE Report revealed that 2 in 3 (67%) UAE residents are actively interested in crypto.
Providing local fiat currency support has always been a key pillar of Kraken’s global strategy: we were one of the first crypto exchanges to provide euro trading pairs back in 2013. Fiat on-ramps make crypto accessible to more people around the world, thereby furthering our mission to accelerate the adoption of crypto.
While we can’t discuss future potential listings, it’s important to note we don’t take decisions to support new fiat currency pairs lightly. It is a testament to the UAE’s visionary and inspiring push to become a global crypto hub that has ultimately made it a natural choice for Kraken to launch local trading pairs.
What are Kraken's top priorities within the UAE and the Middle East within the next five years?
We are excited about being the first, fully licensed provider to bring AED-direct crypto trading and hope to bring even more firsts to the region in the months and years to come.
Our focus right now remains on ensuring the smooth rollout of AED trading pairs and ensuring we start as we mean to go on, by delivering the best possible client experience. This includes hiring a full team dedicated to working in the region and liaising with the local community. We have already made great headway with a senior leadership team already established in the region, as well as a fully functioning office on Maryah Island.
Having just launched in the region, we want to make sure we continually hone our product proposition to make sure investors have the very best quality experience, and very best quality investments, available. We of course have other grand ambitions for the region though we are staying focused on getting our offering right before expanding further.