Kraken Receives Full Financial License in UAE, Sets Up Middle East HQ

Key Insights:

• Kraken enters Dubai’s fast-growing crypto community after receiving a full financial license.
• Kraken has established its Middle East HQ in Abu Dhabi.
• The exchange will soon allow investors to trade crypto directly in UAE dirhams.

Following Binance and FTX, the veteran US cryptocurrency exchange Kraken gets a green signal to operate in Abu Dhabi, but this time, a full financial license.

Emirates has been continuously evolving as a virtual asset community by embracing a slew of global crypto exchanges and services in recent times. Kraken, being the latest, has received a Financial Services Permission (FSP) license from the Abu Dhabi Global Market (ADGM).

Whereas the world’s largest crypto exchange, Binance, only holds an in-principle license – a preliminary approval – to operate in the UAE.

The UAE’s international financial center said in a Monday release,

“Kraken is the first global cryptocurrency exchange to receive a Financial Services Permission (FSP) license to operate a regulated virtual asset exchange platform in the ADGM to service the needs of the Middle East and North Africa region.”

Kraken Establishes Middle East Headquarters

Kraken has set up its regional headquarters in the capital of the United Arab Emirates. The new unit will be headed by an experienced senior executive to drive its UAE business and plans, the release noted. However, the supervisory board remains unknown.

This month, Kraken’s CEO Jesse Powell released a statement that the company has shut down its headquarters in San Francisco after blaming the city for not ensuring public safety.

BREAKING: KRAKEN CEO Jesse Powell @jespow today issued a statement regarding rampant crime in San Francisco and the failures of DA @chesaboudin . pic.twitter.com/7gx7PldQM0

— Richie Greenberg (@richieSF2016) April 7, 2022

The UAE’s FSP license will allow Kraken’s 8 million user base to invest, trade, and deposit crypto assets such as Bitcoin and Ethereum directly in dirhams (AED).

Per Curtis Ting, Managing Director of EMEA at Kraken,

“We are delighted to have received full approval, and to soon launch regulated AED markets that will sit adjacent to Kraken’s industry-leading ecosystem of crypto products, including staking, spot markets across 120+ crypto assets, regulated futures, and our forthcoming NFT marketplace.”

Last December, the global crypto exchange platform considered opening a non-fungible token (NFT) marketplace to attract collectors and speculators.

“Phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs,” said Powell in an interview with Bloomberg News.

The push comes as larger rivals, including Binance and FTX exchange, have already launched their NFT marketplaces, while millions have signed up for Coinbase Global Inc.’s NFT waitlist.

Middle East – Most Preferred Destination for Crypto Exchanges

Curtis Ting calls the UAE one of the most “financially innovative jurisdictions in the world.” According to data compiled by Chainalysis, the country is the Middle East’s third-largest crypto market, trailing Turkey and Lebanon. It has a transaction volume of about $26 billion.

Ronit Ghose, global head of fintech and digital at Citi, told CNBC on Thursday,

“One of the reasons we see an influx of entrepreneurs, builders, operators and developers coming into Abu Dhabi and Dubai … is because there is a sense of greater regulatory clarity at ADGM, in Dubai, and at a federal level.”

He added that the region is beginning to establish itself as both crypto and a web3 hub.

That aside, the country, though being more “crypto-friendly” in the eyes of market players, has been “gray listed” by the world’s leading anti-money laundering watchdog, the Financial Action Task Force (FATF). This is because the Gulf country isn’t sufficiently stemming illegal financial activities, the regulator noted last month.