UAE VARA regulator suspends FTX Crypto Exchange license in a region that was its third biggest revenue base globally

 

 

As the FTX debacle unfolds and FTX files for bankruptcy, CEO steps down, UAE VARA ( Virtual Asset Regulatory Authority) in Dubai has suspended FTX’s license. FTX MENA users brought in high revenues for FTX as it was considered as the third biggest revenue region for FTX. 

While the crypto markets are in turmoil across the globe, it will also have an effect on the MENA region. FTX MENA CEO Balsam Danhach told Reuters in a previous interview,  "Our license expands to retail customers as well, however, it will be a gradual scale up to ensure that we approach the retail market within the guidelines set by the Virtual Assets Regulatory Authority.”

Danhach also told zawya in a recent interview that their operation in MENA region is the second to third region in terms of global revenue performance. At the time FTX had 6 million users with a trading volume of $12 billion per day.

He stated in his interview with Zawya, talking about MENA and the importance of their license in UAE, “We are not talking about a region contributing a small percentage to our revenues but a region which is among our top three in terms of revenues. Here there are higher volumes per user.”

While FTX officially launched in UAE on October 31st 2022, its CEO had commented that from July 2022 until October FTX was testing backend migration of their existing user base from MENA onto their FTX MENA platform. FTX was offering the same access to all the services offered globally through the local FTX page. He stated at the time, “We are working on trading in UAE dirhams and accessing local banks.”

FTX MENA replying to a post on LinkedIn stated that they had not actually commenced operations locally. " FTX MENA would like to clarify that the announcement of receiving its MVP License indicates that we are only able to commence readiness measures. Rigorous pre-conditions set by VARA have to be met by FTX MENA before undertaking any active market operations in the UAE. FTX MENA confirms that we are still in the readiness preparation phase and have hence not onboarded any clients nor engaged in any active operations locally as we have not received VARA approval to do so." 

FTX Exchange, was the first Virtual Asset Service Provider (#VASP) to receive the MVP license to operate its virtual asset (VA) exchange and clearing house services from Dubai’s Virtual Assets Regulatory Authority (VARA).

Given the comments made by FTX MENA CEO,  it seems that there will be an effect on a number of crypto traders in the region. What could be worrisome is how will this play into the crypto growth in the region, and UAE’s stance on crypto and crypto regulation.