Since 2022, it has become far easier to use cryptocurrency as a payment method in Dubai. From shopping malls to hotels, it’s no longer difficult to find a place to spend your Bitcoin or Ethereum. Widespread crypto adoption coincided with the formation of the Dubai Virtual Assets Regulatory Authority (VARA), which was created to regulate the crypto market. VARA has helped legitimize digital currency and create a regulatory framework.
The formation of this body has acted as a springboard for businesses to start accepting cryptocurrency from their customers. However, just because it’s possible to do so doesn’t mean Dubai-based businesses necessarily have to start implementing crypto acceptance. So, why is it becoming more widespread? Let’s find out.
More people are using cryptocurrency
UAE has a population of 9.441 million. Within this mass amount of people, crypto investors and traders remain a relatively small percentage. However, the country is witnessing exponential growth in crypto investors. The crypto trader count passed 500,000 for the first time in February of 2024. This reflected a year-on-year increase of 51%. Clearly, cryptocurrency interest is on the rise. But what are people using it for?
For many people, crypto is merely seen as an investment type. Bitcoin reached its all-time high this year when it peaked at $73,000 in March. Events such as this create more widespread interest in its investment value.
Elsewhere, crypto has a more practical value, which includes paying for goods and services at the likes of the Palazzo Versace Dubai and The Mall of the Emirates, each of which has been accepting crypto since 2022.
Plus, due to its nature, digital currency can also be used for a range of different purposes online. This includes online gaming, particularly crypto casino sites. These sites allow gamblers to play poker and blackjack using the likes of Bitcoin and Ethereum. According to crypto analyst Hicham, these platforms are preferred to fiat currency gambling sites because they offer huge bonuses, lower fees, and player anonymity (source: https://www.techopedia.com/ar/cryptocurrency/best-crypto-casinos).
Thanks to blockchain technology, they also provide better security.
Appeal to international visitors
Cryptocurrency isn’t only undergoing popularity growth in UAE; many other countries throughout the Middle East have experienced a popularity boom in the last year – Dubai just happens to be the current hub of crypto within the region. Plus, Europe, Africa, America, and Asia are all becoming more crypto-friendly by the day.
According to WP Travel, Dubai was the third most visited city in 2023, with 16.8 million international arrivals. It is to be expected that a significant number of these arrivals were avid cryptocurrency users looking for places to spend digital currency.
It is estimated that tourism in Dubai contributes around 9% of the total GDP, which is significant. In order to maximize tourist spending, it would make sense for Dubai to offer more crypto opportunities.
This is partially the reason why the Palazzo Versace Dubai accepts cryptocurrency for everything from spa treatments to dining. This hotel is likely visited by more tourists than it is UAE residents, suggesting that it accepts crypto in order to appeal to more international visitors.
When people visit Dubai, they expect the city to be cutting-edge and at the forefront of new technology. Widespread crypto-acceptance is part of this expectation.
Lower transaction fees for businesses
Crypto acceptance can prove more economical for businesses in Dubai. Like most of the rest of the world, the UAE is moving closer to being a totally cashless society. Physical cash only accounts for around 18% of purchases in the UAE as of 2024. What this means is that the vast majority of people are using digital payment methods for goods and services.
As it stands, credit cards are the most common type of payment method in the country. However, eWallets also account for a significant amount of transactions, with the likes of PayPal and Apple Pay being accepted in a wide range of establishments. While these payment methods are convenient to the customer, they’re not always convenient for the merchant. Normally, a fee is charged to the merchant for each transaction.
Credit card transactions tend to cost the merchant somewhere between 1.5 and 3.5% of the product price. While this is minor, it can add up – especially when you consider transactions that cost hundreds of dirhams.
This could explain why the likes of The Mall of the Emirates decided to start accepting crypto payments in 2022. Crypto has a much lower fee structure than other digital forms of payment, which makes it a favorable option amongst merchants.
Wages are now being paid in crypto
As of August 2024, it’s now possible for those employed in Dubai to receive their salary in cryptocurrency. The Dubai Court of First Instance passed Labour Case 1739 which allowed businesses to pay employees in a cryptocurrency of their choice, as long as this option is mentioned in the employment contract. This marked a huge shift in legislative standing, as the court had previously rejected a case that requested a similar right in 2023.
While this is only a recent development in crypto, it’s still worth mentioning as it will likely increase the number of people in Dubai who have cryptocurrency to spend. In order to cater to these people, businesses will be forced to start accepting digital currency.
Plus, given that wages can now be paid in crypto, more crypto-first businesses will be encouraged to set up trade in the UAE. This could result in an even higher level of crypto workforce moving to the country and looking for places to spend their digital currency.
