The Bahrain-based cryptocurrency exchange Rain said on Tuesday that it has received permission to operate in the United Arab Emirates (UAE) as both countries continue their crypto push.
The Abu Dhabi Global Market granted Rain “financial services permission” to operate a virtual assets brokerage and custody service. Through Rain’s entity in Abu Dhabi, UAE residents will be able to buy, sell and hold virtual assets, such as cryptocurrency, via transfers from Emirati dirhams, the company said in a series of tweets.
CEO and co-founder Joseph Dallago said on Twitter that Rain first inquired about receiving the permission in 2018 after the Abu Dhabi Global Market released its virtual assets framework. Dallago continued that Rain has entered into a partnership with an unspecified local bank in the UAE.
The Abu Dhabi Global Market is a community of international businesses with a separate regulatory regimen from the rest of the UAE. Rain already has an entity in the market.
Co-founder Yehia Badawy said on Tuesday that local asset managers were hesitant to work with cryptocurrency companies that did not have a domestic license, according to Reuters.
Why it matters: The UAE has been seeking to attract cryptocurrency firms as per its economic diversification strategy. The crypto push has not been without its challenges. The UAE has been accused of becoming a hub for wealthy Russians to liquidate cryptocurrency in response to the sanctions resulting from the invasion of Ukraine last year.
Emirati authorities are also seeking to strengthen regulation of the sector. In May, the UAE’s Virtual Assets Regulatory Authority reprimanded Open Exchange for alleged “unregulated activity.”
The crypto market crash last year has also affected the UAE’s crypto ambitions. In February, the crypto exchange Kraken announced it was closing its Abu Dhabi office amid the market downturn.
The UAE’s crypto scene continues to show signs of growth, nonetheless. The US crypto platform Coinbase visited the Hub71 tech ecosystem in Abu Dhabi in May, and is also eyeing moves to the country. Coinbase is a backer of Rain.
Bahrain also has a strong cryptocurrency scene, and is the base of the regional exchange CoinMENA. In February, the Novotel Bahrain Al Dana Resort in Manama announced it would accept payments in cryptocurrency.
Know more: The Gulf may attract more cryptocurrency business in response to the crackdown on crypto in the United States, according to a June memo from Al-Monitor PRO.