Cryptocurrency was arguably the main investment success story of 2017, as the likes of bitcoin, ripple and more gained a lot of media attention. Bitcoin saw its value rise by 1,318% last year, yet it was still only the 14th best-performing cryptocurrency as various others experienced significant rises in value too. Despite the crypto boom that was and still is occurring, it has had little impact in the Middle East so far. This could be a good opportunity many entrepreneurs are currently missing out on.
Middle East Licensing
In February 2018 the first company in the Middle East became licensed to trade cryptocurrencies by the Dubai Multi Commodities Centre (DMCC). This is a great step forward for cryptocurrencies making a breakthrough in the region, with the company licensed to store bitcoin, Ethereum and more, located in Almas Tower in Dubai. It could represent further licences being granted and offer hope for start-ups to start trading too.
Speaking about the first licence to be given, DMCC Executive Chairman Ahmed Bin Sulayem said: “At the heart of DMCC’s long term strategic growth plan is the use of technology and innovation to disrupt and connect new markets, industries and customers. The announcement today embodies this approach.”
As cryptocurrencies are a relatively new phenomenon, there is still a lot of uncertainty surrounding what will happen to them. Regulation is a grey area as they do not rely on central banks, while for many their price remains highly volatile.
Fears about a cryptocurrency bubble could put off many entrepreneurs and there is some risk involved. If the bubble does burst then many investors would stand to lose a lot, yet it remains to be seen if the price crashes signal a bubble bursting or just volatility. The likes of bitcoin CFDs offer an alternative route though, as you don’t own the underlying asset and can profit from falling markets.
How to Set One Up
Setting up a cryptocurrency exchange in the Middle East isn’t easy, though one entrepreneur who has done so in India has three main tips to follow:
- Build a community: Gauge the interest and meet traders who may be interested in your service
- Understand regulations: Research any existing regulations that are in place and apply for a licence
- Create a quality product: Look at competitors in other regions to work out what your business needs to do and how it can be achieved
Cryptocurrency offers some interesting opportunities for those willing to take a risk and set up a trading exchange or business around them in the Middle East.