The world of cryptocurrencies has caused a lot of chaos in the economic powers around the globe. Bitcoin soared to $20,000 before plummeting to around $6000 per coin since the beginning of 2018. This has led regulators in countries like the USA and South Korea to be cautious towards Bitcoin as is evident by the denial of several proposals to create Exchange Traded Funds (ETFs) for Bitcoin. But this caution from the world’s biggest economies has opened up some exciting opportunities for smaller countries like Malta, Singapore, and Dubai. Here’s a look at everything Dubai is doing right with regards to the regulation of Blockchain Technology.
Blockchains for Governance and Organization
Most people who are familiar Blockchain Technology consider Blockchains primarily as a technology that will impact the finance and banking industry. While it’s true that the world’s first Blockchain, Bitcoin, is going to have its most significant impact in those two industries, Blockchains have come a long way in the ten years since Bitcoin has been in operation. With the introduction of smart contracts in Ethereum, a whole new world of possibilities opened up for Blockchains as they allowed for “programmable money.” The concept of decentralized, trustless applications, is a game changer for industries like supply chain management and shipping along with governance. For logistics and shipping, Blockchains allow for automated tracking of a shipment at every level in the supply chain. This allows for lower levels in the chain to anticipate any delays and to effectively plan for them in advance. Additionally, because of the security of afforded by Blockchains, the information stored on the ledger is completely resistant to tampering, making it a shared “truth ledger” for all the involved parties. Corporations like Wal Mart and Fed Ex are already testing out Blockchain Technology to lower costs and increased efficiency in their internal management for that reason.
Similarly, Blockchain has several use cases for governments from cutting legal red tape to automating taxation and returns; Blockchains can streamline several of the key duties of the governments. One of the challenges in developing countries is that of land ownership in rural areas. When rural provinces go through government changes, the corrupt leaders are known to redistribute land to their cronies by altering the land titles which are kept locally. Blockchains can be a big boon to these situations as they can be used to store sensitive information securely. Additionally, Blockchain can be used to track campaign donations and also how the power elites utilize taxpayer funds. One of the biggest complaints against governments around the world revolves around the lack of transparency in how taxpayer money is spent for infrastructure and other purposes. Corrupt politicians routinely misappropriate funds that are allocated for the benefit of the citizens and seldom get caught doing that. Blockchains are very transparent and therefore ideal for managing government resources so that taxpayers are entirely aware of how their taxes are being utilized.
The Rise of Dubai as The Fintech Hub in the Middle East
Dubai is all set to become the leader of the blockchain revolution in the Middle East by embracing the technology to conduct all of its official business. Smart Dubai is an initiative undertaken by the government of Dubai to facilitate innovation in the emirate. Aisha Bin Bishr, director general of Smart Dubai, was quoted as saying “We want to make Dubai the first blockchain-powered government in the world by 2020.” This is a very ambitious goal, but one that is expected to make the process of doing business in Dubai more efficient. Specifically, the Smart Dubai initiative is focusing on two primary objectives. First, Saving millions of dollars in manual processing of government documents like passports, driving licenses and visas by using blockchains to handle the brunt of the labor. They plan on reducing the costs of manual processing by partnering with ConsenSys. Additionally, they want to improve governmental cooperation by moving inter-governmental paperwork onto blockchains through a new local startup called Arabian Chain.
In August last year, the Dubai Financial Services Authority (DFSA) and the Securities and Futures Commission (SFC) in Hong Kong reached an agreement for long-term cooperation between the two organizations to help startups in the Middle East. The initiative also goes to show that Dubai is keen on leading the region in matters of cutting-edge financial technologies.