As the UAE's digital currency landscape evolves swiftly due to proactive government measures, technological progress, and rising investor interest, crypto consumers find themselves in a prime position to seize promising short to medium-term investment prospects following the US elections, according to crypto experts.
Donald Trump's return to power has reignited investor confidence, and analysts believe his policies could foster a more favorable regulatory climate for cryptocurrencies. 'Historically, Trump's administration has been more lenient towards digital assets, potentially drawing more institutional investment,' says crypto economist Dr. Emily Carter.
In the UAE, where the number of digital currency users is projected to hit 3.78 million by 2025, popular investment options include Stablecoins, Bitcoin, and Ether, according to Arun Leslie John, chief market analyst at Century Financial. Stablecoins dominate, accounting for 55% of total crypto activity in the UAE, while Bitcoin and Ether hold the second and third spots with shares of 19% and 9.0%, respectively, John notes.
On Wednesday, Bitcoin, regarded as the gold standard in the digital currency realm, saw its price surge above $88,000. BTC is now consolidating near $90,000 and might experience a slight dip soon. 'Bitcoin's scarcity and growing institutional adoption make it a robust choice for those eyeing short to medium-term investments,' says crypto expert and analyst Sarah Johnson.
Last year, the UAE joined a select group of nations launching a central bank digital currency (CBDC). The country has made substantial strides in refining its regulatory framework to facilitate the seamless integration of dirham-backed Stablecoins for payments and non-dirham-backed cryptocurrencies for virtual asset transactions. Between July 2022 and June 2023, the UAE processed around $400 billion in on-chain value, placing it as the sixth-largest crypto economy globally. From July 2023 to June 2024, the UAE received $34 billion in cryptocurrencies, marking a 42% year-over-year growth, making it the third-largest crypto economy in the MENA region.
The number of digital currency users in the UAE is anticipated to reach 3.78 million by 2025, with a penetration rate projected at 39.20% in 2024 and expected to remain at 39.13% by 2025, thanks to the Federal Tax Authority's move to exempt cryptocurrencies and digital assets from VAT.
In October 2024, the Central Bank of the UAE granted in-principle approval for a Dirham Stablecoin under its Payment Token Service Regulation framework. 'In H1’2024, the total value of Stablecoins transacted on centralized and decentralized exchanges in the UAE amounted to $9.8 billion,' John said.
A Bitget Research survey in April 2024 revealed that over 72% of UAE residents have invested in Bitcoin, with increased participation from Emirati investors. Dogecoin, Solana, XRP, Shiba Inu, and Cardano are also closely monitored cryptocurrencies in the UAE.
'Recently, the Federal Tax Authority (FTA) announced that cryptocurrencies and digital assets would be exempt from VAT in the UAE. This provides crucial clarity on tax treatment for crypto businesses, essential when dealing with such a volatile asset class. This not only eases their tax burden but also attracts foreign investment,' analysts noted.
The UAE government has proactively fostered a conducive environment for digital currencies. The Abu Dhabi Global Market (ADGM) and the Dubai Multi Commodities Centre (DMCC) have established regulatory frameworks that promote innovation while ensuring compliance with international standards.
According to crypto strategist Mark Thompson, Ethereum is poised for significant growth. 'Ethereum's robust ecosystem and upcoming upgrades position it as a key player in the crypto space,' he says.
Analyst Rachel Lee advises, 'Investors should consider Binance for its strong market position and utility within the Binance ecosystem.' Other cryptocurrencies gaining traction among investors are Solana and Cardano. 'Solana's speed and efficiency could make it a top choice for investors seeking high-growth potential,' says blockchain expert Ahmed Al-Farsi. 'Cardano has a solid foundation and a vision for sustainable growth,' says crypto researcher Lena K.
Globally, other digital currencies offering growth potential include the US Dollar Coin, Ripple, Dogecoin, Toncoin, and Tron.
Source link: https://www.khaleejtimes.com
