Binance Weighs Up UAE Expansion Amid Regulatory Pressures

Report: Can Bitcoin Replace Gold As a Safe Asset?In light of the substantial increase in Bitcoin (BTC) prices this year, a report from KB Financial Group in South Korea examined the potential for BTC to replace gold as a safe asset.©Pexels/Michael SteinbergThe study delves into the factors behind the recent BTC price surge and emphasizes the need for caution when considering BTC as an alternative to traditional safe assets.3 drivers behind BTC surgeFrom January 1 to March 31 this year, BTC experienced an impressive return of 71%. This surge can be attributed to three main factors: an anticipated increase in liquidity due to market expectations of unchanged or falling interest rates; central banks supplying liquidity to mitigate risks in the traditional banking system; and concerns over the potential delisting of cryptocurrencies should the US court’s decision on the Ripple-SEC case classify XRP, Ripple’s native token, as securities, prompting investors to shift their focus to BTC.The report suggests that the current BTC boom is more likely a result of short-term arbitrages and social conformity, given the greater information asymmetry in the crypto market, which lacks the disclosure system present in traditional stock markets.Persisting risk factorsLast month, blockchain tracker Whale Alert spotted a transfer of 11,125 BTC from an anonymous address to Binance. The primary reason for moving assets from a private address to an exchange address is to sell them, indicating that investors should keep a watchful eye on Bitcoin trading volumes, particularly for any signs of large sell-offs.Data from the crypto data analysis platform Glassnode revealed that the percentage of the BTC supply that was active over a year ago reached an all-time high of 68% in late March. Historically, such an increase has been associated with falling BTC prices.This year, the BTC supply is set to grow due to the US government’s liquidation of seized BTC. As detailed in a March 31 Cointelegraph article, the US government seized 51,352 BTC in a case related to Ross Ulbricht, the creator of the online black market Silk Road. The government has already sold 9,861 BTC, with the remaining amount expected to be liquidated in four additional portions throughout the year.Binance, the world’s largest crypto exchange by trading volume, has been struggling to find banks in the US to store client funds after crypto-friendly banks Silvergate and Signature closed their doors.Need for cautionAlthough various media sources often portray BTC as a safe asset, the report advises caution in accepting these claims. Although some liken BTC to “digital gold,” the two assets share little in common beyond their finite and scarce nature. In fact, gold and BTC diverge significantly in terms of social consensus, intrinsic value, price volatility, and investor protection.Gold serves as a highly liquid asset with applications in both jewelry and industrial goods, in addition to its role as an investment vehicle. In contrast, BTC’s intrinsic value is still debatable. The price volatility of BTC is also a concern, as evidenced by its 71% spike in the first quarter of 2023, compared to gold’s modest 8% increase. Additionally, gold investment products are regulated by law, whereas BTC is not. The report thus recommends treating BTC as a high-risk product and incorporating it into a diverse investment portfolio.It is worth noting that since the outbreak of the COVID-19 pandemic, the crypto market has demonstrated a stronger correlation with the global stock market in response to negative signals. This trend can be partially attributed to the growing presence of institutional investors in the crypto market, who often sell risky assets first to secure liquidity in the face of unexpected shocks.

MultiBank Group, a global financial derivatives company headquartered in Dubai, has partnered with two other United Arab Emirates (UAE)-based firms, real estate giant MAG and tokenized real-world asset (RWA)-focused blockchain infrastructure provider Mavryk, in a $3 billion tokenized real estate deal.Photo by Tierra Mallorca on UnsplashWhile a large proportion of MAG's business activities center around the Dubai real estate market, MAG Group is a multinational conglomerate with a portfolio that includes commercial and residential developments and high-end luxury real estate projects.  According to a press release published on May 1, this $3 billion deal implicates MAG’s luxury developments, such as The Ritz-Carlton Residences in Dubai and other properties located within the Keturah Resort and Keturah Reserve in the UAE’s most populous city. These properties will be tokenized and hosted on the blockchain through MultiBank.io’s regulated tokenized RWA marketplace. Mavryk will provide the necessary infrastructure, with the tokenized assets running on its blockchain network. The deal provides another indication of the growing role of tokenization, with it being the largest tokenized RWA deal to have been put together to date. The Mavryk Network testnet was launched in February, with Mavryk Network developer Mavryk Dynamics securing $5 million in funding to establish a tokenized RWA network economy. In this instance, Mavryk will provide support in terms of on-chain asset issuance and DeFi integrations. Not just a real estate dealTalal Moafaq Al Gaddah, senior executive vice chairman of MAG, said that the project “marks a milestone in broadening access to high-value developments and unlocking liquidity via blockchain.” Al Gaddah also commented on the MBG token, stating:“$MBG token provides ecosystem utility, including trading discounts, early access to properties, and a deflationary buyback-and-burn model.” MBG is a MultiBank utility token which features deflationary tokenomics. It will be used to enable staking and lower trading fees. The token is scheduled to be launched on June 2. MultiBank.io Founder and CEO Zak Taher highlighted the importance of the token launch alongside this tokenized real estate deal. He stated:“This isn’t just a real estate deal — it is a flagship use case for the $MBG token. By enabling seamless access to $3B in tokenized property, MultiBank becomes the bridge between regulated finance and next-generation investment infrastructure.” Dual utilityAl Gaddah referred to the duality of the tokenized real estate offering:“Tokenized assets issued by MultiBank will have dual utility. Within the MultiBank Group, they can be used as collateral for derivatives, creating a seamless bridge between traditional finance and tokenized assets.” RWA tokenization has been gaining momentum within the UAE recently. It emerged last month that the Dubai Land Department (DLD), a government agency responsible for the registration of real estate in Dubai, had signed an agreement with local regulator the Virtual Assets Regulatory Authority (VARA) to integrate tokenized real estate within existing systems.  Around the same timeframe, blockchain technology firm Serenity signed a partnership with Dubai’s MTA Real Estate to develop a tokenized real estate platform. Last year RWA-focused layer-1 blockchain project MANTRA Chain announced that it would tokenize $500 million in real estate assets in Dubai.

The United Arab Emirates (UAE) is updating its tax policy such that cryptocurrency-related transfers and conversions will be exempt from value-added tax (VAT).  News of the policy change emerged via the UAE’s Federal Tax Authority (FTA), which published an Arabic version of the updated tax code on Oct. 2, followed by the publication of an English version on Oct. 4.Photo by Darcey Beau on UnsplashExemption backdated to 2018British multinational consulting firm PricewaterhouseCoopers (PwC) published a review of the UAE tax code update on Oct. 4. The auditing firm noted that virtual assets are defined within the UAE tax code as a “representation of value that can be digitally traded or converted and can be used for investment purposes.”It noted that Article 42 of the update dealt with the crypto VAT exemption. The firm suggested that entities dealing with crypto should “analyze the impact of the exemption on their (retrospective) VAT position, especially in respect to their input tax recovery,” adding that voluntary disclosures may be required to correct previous tax returns. Additionally, a VAT exemption has been introduced on services extended to fund managers relative to licensed funds. Younis Haji Al Khoori, a UAE Ministry of Finance official, stated that the amendments have been made with a view towards easing the burden on businesses. He stated:“These amendments help minimise misunderstandings, simplify procedures, and ultimately contribute to an improved quality of life for all.”  Crypto-friendlyAbdulla Al Dhaheri, CEO of the Blockchain Center in Abu Dhabi, commented on the development on X, stating:”The UAE, driven by visionary leadership, continues to set the global standard by becoming the number 1 destination for blockchain innovation. With the elimination of VAT on crypto transfers and conversions, the UAE reinforce their commitment to building a world-leading digital economy, attracting the best talent and investment from around the globe.” The UAE, and particularly Dubai and Abu Dhabi, have taken great strides forward in ensuring regulatory clarity for the virtual assets sector over the course of the past two years. Regulatory frameworks have been put in place, leading to many participants in the crypto sector praising the regulatory stance taken within the UAE.  This latest addition has equally being welcomed within the crypto sector. Many crypto sector participants have highlighted it as a wake-up call for other jurisdictions to follow suit or see crypto enterprises move to the UAE.  The Indian authorities, in particular, have an unfavorable tax policy in place relative to digital assets, with a 1% tax deducted at source (TDS) being applied. This latest development in the UAE prompted some to consider if India would learn from the UAE’s example. Earlier this year, the Indonesian tax framework, which subjects crypto assets to both income tax and VAT, was cited as the main reason for a slump in crypto trading. A recently published report by blockchain data platform Chainalysis found that the Middle East & North Africa (MENA) region accounts for 7.5% of crypto trading volume, with the report noting that the UAE, alongside Saudi Arabia, is showing a strong interest in decentralized platforms.