KHALEEJ TIMES, wednesday, Feb 14, 2018 | Jamadi Al Awwal 28,1439
Gold trader gets Dubai licence to trade and store cryptocurrencies
Emirates: Dubai on Tuesday launched
another innovative initiative by offering investors to store their
cryptocurrencies in a vault located in the headquarters of the commodities free
zone in the emirate.
Dubai-based Gold trader Regal RA DMCC has become the first company in the Middle
East to be awarded a licence by the Dubai Multi Commodities Centre (DMCC) to
trade in cryptocurrencies. The licence allows the company to store Bitcoin,
Ethereum and other alternatives to the best-known digital currencies in a vault
located in the DMCC headquarters.
The vault will have no connection to a network and physical devices are fully
insured for the crypto-commodities market value against theft, hacking or
natural disaster. Crypto-commodities are those that trade in Bitcoin.
"DMCC's crypto-commodities licence is for proprietary trading in
crypto-commodities only. No initial coin offerings are permitted and no
establishment of an exchange is permitted under this licence," a DMCC
"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 and will no doubt come as good news to
the international cryptocurrency market," said Ahmed bin Sulayem, executive
The Regal Assets security process involves generating offline blocks, using the
specific crypto-commodity's blockchain derived algorithm. The key is then
printed offline within the secured environment on a specialised wallet and
placed in deep cold storage in the DMCC vault. Investors can purchase additional
coins, or sell, at any time they wish.
"There has been an increasing trend in investing on cryptocurrencies in the last
few years. The most popular way to buy and sell cryptocurrencies today is
through an online exchange, where investors are susceptible to not just
financial risks but also face threats from cyber criminals," Vinay Datta,
founder and chief executive officer of ThinkAhoy.com, said.
He said the idea of safeguarding individual blocks of crypto-commodities offline
in a cold storage with safety levels as that of gold assures that an investor is
protected and builds a layer of trust on the system.
"Considering that the economy of the UAE is booming and that there are strict
laws and methods in place to safeguard an investor, we could see a definite rise
in crypto-commodity investments. In the long run, this will also stabilise
cryptocurrencies as a channel of investment, which will in turn aid the flow of
investments into the UAE once regulated," Datta explained.
The company's announcement came as the regulator of Abu Dhabi's international
financial centre said on Sunday that it could create rules for exchanges
handling virtual currencies, in a sign that authorities in the UAE may allow
trade in cryptocurrencies in near future.
Ksenia Kiseleva, operations manager, Regal RA DMCC - subsidiary of Regal Assets
- explained that mobile wallets are no more considered secure as these can be
hacked because the private key is held in a device, which regularly connects to
the web, as well as having the private key generated in such a device.
"In deep cold storage, the private key is generated offline. We have a niche
product, our solution is not for people who are dealing with small amounts, or
are active in trading. Our solutions are for institutions or long term asset
holders, similar to storing gold bullion," added Kiseleva.
Deepak Machado, a blockchain/Bitcoin evangelist, said that it is a welcome sign,
that Regal RA has received a licence to trade cryptocurrencies like Bitcoin and
Ethereum, among others. However, what is not clear is what do they mean by
licence to store cryptocurrencies in the vault! Do I have to handover my private
keys? If that is the case, I would take this news with a pinch of salt! I'd be
more comfortable storing my Bitcoins or cryptocurrencies on hardware wallets
like Trezor or Ledger Nano S. Keeping your cryptocurrencies on an exchange is
also quite risky.
"I would like to make this very clear to anyone holding or planning on
purchasing cryptocurrencies 'keep your private keys to yourself!' If you
handover your private keys to anyone, you are no more owner of your
cryptocurrencies. It is like handing over your ATM card and pin to a third
party. Trust no one with your private keys."