Nexo gets on regulatory ladder in Dubai with initial approval
Nexo DWTC, the Dubai arm of the well-known crypto lender, has obtained initial licensing approval from Dubai’s Virtual Assets Regulatory Authority (VARA), marking a significant milestone in the company’s growth and development.
Lending, borrowing and broker-dealer activities
The approval grants Nexo the authorization to engage in virtual asset lending and borrowing, management and investment relative to digital assets, together with broker-dealer activities within the region.
Commenting on the development, Nexo Managing Partner, CFO and Co-Founder Kalin Metodiev, stated:
”Nexo is enthusiastic about the pursuit of new market strategies aligned with the transformative guidance of Dubai's Virtual Asset Regulatory Authority."
The United Arab Emirates (UAE) has played a pivotal role in promoting the region as a nucleus for global innovation and governance. Dubai's early adoption of blockchain strategies in 2016 and the establishment of VARA in 2022 underscore its commitment to emerging as a global epicenter for digital asset innovation. This initiative mirrors the city's longstanding influence in the traditional finance sector.
Seven million worldwide users
For Nexo, which caters to over 7 million users worldwide, the Dubai market represents a substantial opportunity for regional expansion and the delivery of premium services.
Nexo is cementing its position as a leading digital assets institution. However, it hasn’t always been easy for the company. Amidst the broader cryptocurrency downturn post the 2021 market peak, Nexo faced significant challenges. In 2022 prominent crypto lenders faced bankruptcy, drawing heightened scrutiny towards Nexo given its involvement in similar business activities. This prompted speculations about the platform's sustainability.
Additionally, Nexo grappled with regulatory pressures, notably agreeing to a $45 million settlement with the U.S. Securities and Exchange Commission (SEC) for failure to register the offer and sale of its Earn Interest Product (EIP). It also faced money laundering charges in its home base of Bulgaria. These charges were later dropped. Subsequently, the company pursued $3 billion in damages from the Bulgarian state, refuting allegations that brought disrepute to the company following an investigation that found no evidence against it.
Reflective of a more positive outlook more recently, Nexo Co-Founder Antoni Trenchev took to CNBC on March 1, offering his prediction that Bitcoin is on target for a $100,000 unit price in the not-too-distant future.
VARA, established in March 2022 following the enactment of Law No.4 of 2022, assumes the responsibility of regulating, supervising and overseeing virtual assets and virtual asset activities across all zones in the Emirate of Dubai, excluding the Dubai International Financial Centre. VARA's pivotal role in crafting an advanced legal framework is geared towards safeguarding investors, setting international standards for virtual asset industry governance and bolstering the vision of a borderless economy.
Nexo's attainment of initial approval from VARA signifies a major breakthrough in its expansion efforts, underscoring its commitment to compliance and innovation in the digital asset space. This achievement positions the company as one of the few crypto lenders making inroads into the influential Dubai market.
