UAE has the capacity to become the actual incubator of the post-fiat world with the right diligence and enough capital. Dubai is now emerging as a new crypto power center and may anchor crypto bailout fund.
Many people have been looking to Binance CEO Changpeng Zhao, whose dump of FTT tokens decimated FTX, as the last “White Knight” in the cryptocurrency space after he revealed last week that he is attempting to put together a “rescue fund” for distraught crypto players. This is with bitcoin falling to a two-year low and desperate to seek a bottom as every day a new – and exceedingly leveraged – shoe seems to drop as the blowback of the FTX bankruptcy claims more victims.
But not even CZ is large or wealthy enough to become the JPMorgan of cryptocurrency (his worth is $14.5 billion, down from $81.3 billion in January) (and after so many media references to his criminal peer SBF as “the new JPMorgan”, we doubt he even wants that designation). So where does CZ turn to for extra money? Why not the heart of the cryptocurrency universe.
Why not the United Arab Emirates, whose two megacities, Dubai and Abu Dhabi, are springing up as the new hubs of the post-crypto finance industry after also serving as key pillars of the previous, petrodollar-based regime? It is here that so many Russian oligarchs and crypto exiles now reside (“Three Arrows Capital Moving Headquarters to Dubai From Singapore“).
According to Bloomberg, Changpeng Zhao and a number of his subordinates met with investors last week in Abu Dhabi in a bid to seek money for a fund to support the resuscitation of the cryptocurrency business. Last week, Zhao and his team met with potential supporters, including groups connected to Sheikh Tahnoon Bin Zayed, the United Arab Emirates’ national security adviser who is in charge of a vast financial empire, according to the sources.
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It will probably be a few weeks before the vehicle departs, according to the sources, and details regarding the sum of the fund and the initiatives to help have not yet been determined.
“CZ’s meetings in Abu Dhabi were all focused on general global regulatory matters — specifically how Middle Eastern regulators could lead the globe by exploring more aggressive proof of custody requirements for crypto exchanges,” a Binance spokesperson said.
Of course, there is a lot more to it than that: CZ has recognized that the wealthy gulf states, in which the UAE is the undisputed leader, will be the main venue for future crypto development; now he just needs to persuade the local officials to dedicate some of their oil money to crypto in a globe where both Chinese and western governments view cryptocurrency with mistrust and are inclined to squash it over the threat it represents to their ill – fated fiat systems.
Zhao personally relocated to Dubai last year and has developed strong relationships with the UAE government. Zhao tweeted that Binance would establish a recovery fund following FTX’s bankruptcy “to help projects who are otherwise strong but in a liquidity crisis.”
“There are still players with very strong financials and we should band together to try to help the projects in need, especially if it’s only financial need,” he said on the sidelines of Abu Dhabi Finance Week last Wednesday.
The CEO of Binance, who also spoke at the Milken Institute’s conference in Abu Dhabi, had stated that the industry recovery fund had attracted a lot of investor interest and that he anticipated finalizing commitments in the upcoming weeks. According to the insiders, he also brought up plans to interact with Middle Eastern regulators and promote crypto use during his meetings in the area.
Bloomberg claims to have also spotted a Google form with Binance’s name on it that is being used to gauge investor interest. “Thank you for reaching out to Binance regarding the industry recovery fund,” the form said. “We are committed to helping the crypto industry grow stronger in the current market conditions.”
Bloomberg notes that, in line with our assessment of a significant shift in the crypto sector, “with the crypto world facing a crisis of confidence and many Silicon Valley firms burned by FTX’s implosion, the Middle East is becoming the go-to place to seek funds to halt the contagion.”
People with knowledge of the situation have stated that Bankman-Fried spent time in the area in late October in an effort to raise money through meetings with the sovereign wealth funds of Saudi Arabia and Abu Dhabi. FTX went into a downward spiral that forced the exchange and its about 130 affiliated firms into bankruptcy, which fortunately prevented the talks from moving forward.
This time, though, UAE has the capacity to become the actual incubator of the post-fiat world with the right diligence and enough capital.