How to start a crypto-commodities trading firm in the United Arab Emirates

Published on September 14, 2021

How to start a crypto-commodities trading firm in the United Arab Emirates

The recent rise in crypto-commodities trade has been impossible to ignore. For those who read the financial pages, it feels like every second story is about Bitcoin, Ethereum, or Ripple. And if you’ve clicked on this article, chances are you’ve been wondering how to get involved yourself. Of course, most of the attention on cryptocoins focuses on their value – or rather the rapid rise in their value. Take a single Bitcoin for instance: worth USD 1,000 at the beginning of January 2017 and now valued at just over USD 10,000, having reached highs of almost USD 20,000 in mid-December. Naturally, this has caused many enterprising minds to look at crypto-commodities as a business opportunity. And when it comes to the latest business opportunities, there’s no better place to get started than the UAE.

 

How to start a crypto-commodities trading firm in the United Arab Emirates

The recent rise in crypto-commodities trade has been impossible to ignore. For those who read the financial pages, it feels like every second story is about Bitcoin, Ethereum, or Ripple. And if you’ve clicked on this article, chances are you’ve been wondering how to get involved yourself.

Of course, most of the attention on cryptocoins focuses on their value – or rather the rapid rise in their value. Take a single Bitcoin for instance: worth USD 1,000 at the beginning of January 2017 and now valued at just over USD 10,000, having reached highs of almost USD 20,000 in mid-December.

Naturally, this has caused many enterprising minds to look at crypto-commodities as a business opportunity. And when it comes to the latest business opportunities, there’s no better place to get started than the UAE.

 

Why choose the UAE?

This year, the Dubai Multi Commodities Centre (DMCC) became the first free zone in the Middle East to offer government-issued licenses to trade in crypto-commodities. It’s no coincidence that we have been seeing a major rise in requests for advice on setting up cryptocurrency companies.

And this is all tied in with the fact that the UAE has seen overall growth in digital investment over the past five years. According to a report released by Dubai SME in early 2017, the value of tech investments has increased from USD 35m in 2013 to USD 799m in 2016.

Many are surprised to learn that it is perfectly possible to take advantage of the country’s enviable business and tax environment and become a fully licensed crypto-commodity trader in the UAE. To be clear, this applies to proprietary trading – that is to say trading your own money for your own gain – rather than acting as a broker or currency exchange.

As you might expect, there are a few licensing and administrative criteria to be aware of, but provided you’ve armed yourself with the right information you can set up a crypto-commodities trading company in the UAE in no time at all.

 

Trading crypto-commodities in the UAE – what you need to know

If the crypto market has caught your eye and you’re ready to get involved, here’s everything you need to know to get set up in the UAE.

  1. Company requirements: Before applying for your licence to trade in crypto-commodities in the UAE you must first ensure that your company meets the required criteria. There are several things to be aware of here. For one, the company must be able to provide proof that an acceptable Anti Money Laundering and Combating the Financing of Terrorism policy is in place. Your business must also have a formal accounting system and agree to provide audited financial statements on an annual basis. You must provide a letter of undertaking in respect to crypto-commodity trading and complete a business activity questionnaire before making your licence application.

Finally, by Q3 2018 you will be required to either employ a dedicated Compliance Officer or have access to an established Compliance Hub, which offers third party access to compliance support.

  1. Licensing requirements: The easiest way to get into the world of crypto trading is to apply for a licence from Dubai Multi Commodities Centre (DMCC), one of the UAE’s free zones. But first, there are a few licensing quirks to be aware of before setting up.

In summary: To trade in crypto-commodities in the UAE, you must be specifically licensed for this activity. It is not permitted to add crypto trading as an additional trading activity to an existing licence. However, if you already own a UAE business, it is possible to add crypto-commodities trading as business activity under a separate trade licence – though this is subject to approval.

  1. Permitted activities: Before getting started as a crypto-commodities trader in the UAE, it’s important to understand exactly what you can and can’t do under your trade licence.

Let’s start with what is permitted: you can undertake proprietary trading in cryptocurrency. To reiterate, that means your business is investing its own funds for its own gain. This includes the buying and selling of crypto-commodities developed on distributed ledger technology applications.

What’s not permitted under your trade licence: acting as an exchange, providing brokerage services, financial services, banking services, payment processing or storage services. You are also forbidden from launching an Initial Coin Offering (ICO).

  1. Additional registrations: Once your licence application has been approved, you’ll need to sign up to several conditions before you can start trading. First, you must commit to attending a quarterly meeting with the DMCC authorities to discuss both the compliance and sales aspects of your business. You must also agree to allow DMCC to review your company bank accounts, accountancy information, and due diligence files if requested. Finally, you will be required to complete DMCC questionnaires on a periodic basis.
  2. Visa options: As well as applying for visas for you and your employees as a business owner in the UAE, it’s also very straightforward to sponsor your dependants for their visa applications, which is yet another compelling reason to choose this region. Whether you require a visa for a spouse, child, maid or driver, the process is divided into four straightforward stages: entry permit, status adjustment, a medical fitness test, then Emirates ID registration and visa stamping.

Keep in mind, however, that this step is usually slightly easier for men than women, so as it’s such an important part of the process, it’s a good idea to get advice from an expert in setting up UAE businesses. This will ensure that before starting an application, both you and those you are hoping to sponsor meet the entry criteria.

  1. Set up with multiple shareholders:When setting up as a crypto-commodities trader in the UAE, you have the option of going it alone. You can even apply for a Flexi Desk with DMCC, allowing you to work remotely or make use of office facilities on an ad-hoc basis. If, however, you wish to establish your company with a business partner or partners, it is possible to do so with multiple shareholders – up to a maximum of 50 – which can be either individuals, corporate entities or a combination of the two.
  2. Setting up your corporate bank account:It has to be said opening a corporate bank account for a crypto-commodities trading company is not as straightforward as it is for other business activities. However, some financial institutions in the UAE are quickly adjusting to this new activity. A company formation specialist can point you in the direction of an accommodating bank.

Crypto-commodities – a new age of currency trading in the UAE

It is hardly surprising that crypto-commodities have attracted such attention in recent months – and this may well be only the beginning. According to data provider Coin Market Cap, the global cryptocurrency market-worth exceeded USD 700bn in early January 2018, while 2017 saw returns on some coins far outside anything seen in the stock market.

With such a sharp rise in value come stories of great success – from Bitcoin billionaires to traders who turned a few hundred dollars into hundreds of thousands. Take the high-profile case of the Winklevoss twins: they invested some of the millions they made settling their well-publicised Facebook lawsuit into Bitcoin and subsequently became billionaires following a surge in prices.

Indeed, the potential rewards are such that many experts have labelled the cryptocurrency craze as the new gold rush.

Of course, this should come with a word of caution. Crypto-commodity trading is like any other commodity in that it involves an element of risk. The additional approvals and registrations required to trade in the UAE are there for a reason – to ensure those entering the market do so with the right know-how and information at their disposal.

But none of this should be prohibitive – particularly if you take the time to consult a company formation specialist beforehand. And providing you are fully prepared, there’s no reason why crypto-commodity trading can’t serve up impressive returns, especially right now with the market still in its relative infancy.

So if you have an eye for the markets, the skill and expertise to execute timely trades, and want to be part of an exciting new age of currency, there is no better time – and indeed no better place – to set up as a crypto-commodities trader than in the UAE.

 

Ready to get started, kindly send an interest mail to enquiries@exsusinternational.com

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