Crypto giant Binance eyes UAE acquisitions and Saudi expansion

Reuters/Dado Ruvic/Illustration

• Mena users of Binance have increased 49% YTD 
• Saudis rank third among Arab owners of crypto assets
• UAE is ranked fourth most crypto ready country
• Both countries are cautiously embracing crypto regulation

Crypto exchange Binance is in talks with financial regulators in Saudi Arabia to expand into the kingdom.

The company is also eyeing web3 tech investments in the UAE, and has appointed a fund manager based in Abu Dhabi.

Binance, which is the world’s biggest crypto exchange, saw a 49 percent year-to-date increase in its Mena users this year, which it said indicates rising interest in virtual assets.

Saudi citizens are ranked third in the Arab world in terms of those owning cryptocurrencies, according to a report published by TripleA, a Singapore-based company dealing with them.

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“We are speaking with both the Capital Market Authority (CMA) and Saudi Arabian Monetary Authority (SAMA),” Alex Chehade, executive director and general manager of Binance FZE in Dubai, told AGBI.

“Our expansion into other countries depends on where we can be licensed. We are reaching out to governments and regulators to help them build virtual asset frameworks. We feel that it’s our duty as the largest company in this ecosystem.”

Oversight of financial regulation in the Gulf Arab state is split between SAMA for banks, payment service providers, insurance firms and finance companies, and CMA for securities and the Saudi capital markets.

So far, Saudi Arabia, the Gulf’s largest economy, has treated cryptocurrencies with suspicion.

In 2018 SAMA issued a warning against trading in them due to “their negative consequences and high risks on the traders as they are out of government supervision.”

SAMA said that virtual currencies, including Bitcoin, are not approved as official currencies in the kingdom, and no Saudi-based parties or individuals are licensed by regulators for such practices.

The regulator cautioned Saudi citizens and residents against “drifting after such illusions and get-rich schemes” due to the high regulatory, security and market risks involved.

But in September SAMA appointed an executive specifically to lead its virtual assets and central bank digital currency program, signalling a change in the state’s approach to cryptocurrencies.

“We are partnering with all the regulatory entities that we can to develop a flexible virtual asset specific framework,” Chehade said. 

“It’s essential for our mission to accelerate crypto adoption. We think that this is a key region for growth. The Mena region has the potential to be a leading hub in shaping the future of web3.”

Binance has been under scrutiny from financial regulators across the world.

Some global regulators have banned the platform from certain activities. Others have warned consumers that the crypto exchange – also the world’s largest by trading volume, accounting for more than half the trading in the trillion-dollar market – is not licensed to operate in their jurisdictions.

The company recently received a Minimal Viable Product (MVP) licence from Dubai’s Virtual Asset Regulatory Authority (VARA), following the issuance of its provisional licence in March 2022.

The MVP licence means that Binance can offer an approved range of virtual asset related services to suitably qualified retail and institutional investors in Dubai.

“The advantage here [in the UAE] is that we have specific regulators,” Chehade said. 

“In other jurisdictions, where they’ve not had the ability or foresight to do this, they’ve had to start with a baseline of regulations that were either constructed a very long time ago, or at a time when virtual assets weren’t around. 

“The paradigm has changed, and these products aren’t well looked after by these legacy rules and regulations. In the US, for example, they have an issue where the regulators aren’t sure who should be dealing with these assets. 

“We are lucky enough that we have VARA [in Dubai] and they’ve been created for this innovation, and for us to have dialogue with these regulators to build a progressive ecosystem.”

The UAE has been ranked fourth in a list of the world’s most crypto-ready countries, published by forex education platform Forex Suggest.

The Emirates have been pushing to develop virtual asset regulation in order to attract new forms of business as economic competition heats up in the region.

In July, Hong Kong-based cryptocurrency exchange Huobi Group announced plans to set up operations in Dubai, describing the city as a global hub for the virtual asset industry.

Huobi added that it was committed to establishing a regional headquarters in Dubai and expanding its workforce in the emirate.

Seychelles-based crypto trading app OKX, which trades more than $1.5 billion daily, also said it was planning to make Dubai its regional hub after securing a provisional licence from the VARA.

Meanwhile, Binance, which has some 400 employees in Dubai, plans to continue its hiring spree in the region and grow “substantially for at least a couple of years”, Chehade said.

“We’re hiring in all business verticals,” he said, adding that the company was also looking to add more Arabic speakers to its team.

“They play a crucial role in supporting development of our user experience to meet the needs of the local market and the Arabic speaking users in the region.” 

The company has earmarked $1 billion for acquisitions in the current bear market and is considering targets, including banks, in a bid to entice cautious conventional financial institutions into the nascent digital assets industry. It is also eyeing investments in web3 technologies.

“We have a very active investment team inundated with lots of products and businesses,” Chehade said.

“We have set up a fund manager in Abu Dhabi and we are always looking for acquisitions. The main thing is the web3 ecosystem – that’s what we are investing in and are looking to grow. We have grown from more than just a centralised exchange.”