The United Arab Emirates (UAE) has emerged as a leading hub for blockchain technology in the Middle East, with trade finance gaining a significant chunk of the rewards.
A combination of government initiatives has put the UAE on the global roadmap for blockchain adoption, culminating in financial and trade innovation for the Gulf nation. As the UAE pivots away from oil, it is keen on establishing itself as a global commercial hub, with experts citing mainstream blockchain integration as key to achieving its goals.
The government has taken the first steps toward integrating blockchain into its financial ecosystem by rolling out a comprehensive legal framework for blockchain firms dabbling in finance. Geared toward consumer safety, the UAE’s attempt at a rulebook has attracted several blockchain firms looking to set up shop in the country, citing regulatory clarity as a major deciding factor.
In terms of policy, the emirate of Dubai led the way back in 2016 after it unveiled a Blockchain Strategy designed to transform the city into a blockchain-powered emirate. Inspired by Dubai’s strategy document, the UAE’s central government rolled out a national strategy to move 50% of government transactions to publicly distributed ledgers.
So far, the national blockchain strategy has yielded a streak of positive results for the UAE and its Web3 industry stakeholders. A rating by Henley & Partners gives the UAE a 10/10 rating for tax-friendliness and high marks for innovation, regulations, and public adoption.
For infrastructure adoption, the UAE scored a decent 5.9/10, with authorities urged to increase their investment to deepen the local talent pool.
Despite the slew of positives, UAE’s Small and Medium Enterprises (SMEs) have been unable to leverage blockchain to access trade finance, unlike other industries. Properly leveraging blockchain for trade finance eliminates multiple intermediaries, saving time and cost.
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