UAE crypto investing: After RAKBank, how soon will other UAE banks join in?

Dubai:  For UAE investors, buying or trading in crypto currencies is becoming mainstream.

RAKBank this week confirmed its app will soon allow retail clients to trade in crypto – and more UAE banks are ready to launch their own services in this space.

The thinking is simple – the number of UAE based investors buying into Bitcoin, stablecoins and other cryptocurrencies are rising ‘by the day’. And banks don’t want to miss out on this level of interest.

Just as important, the trades will be in dirhams.

“Most banking apps already allow trades in stocks and (fractional) investments in physical or digital gold,” said a senior banking industry source. “Offering these retail customers the chance to invest in crypto is the logical step.

“As banks, we don’t want our clients to switch between our apps and trading apps for their investments.”

Now that RAKBank has become the first to announce such a move, the race is on as to which will be the next bank allowing crypto trades for individuals. Its app will allow access to ‘right major (crypto) coins’. (Note: The service for now will be on a ‘by invite only’ basis.)

The other big development in the world of crypto is, of course, the passage of the US’s ‘Genius Act’, which regulates stablecoins.

According to the US Government, the Act ensures the stability and trust in stablecoins ‘through strong reserve requirements’.

“The Genius Act requires 100% reserve backing with liquid assets like US dollars or short-term Treasuries and requires issuers to make monthly, public disclosures of the composition of reserves.”

The ripples from the Act is now reaching into the UAE’s investor community.

“Customers are increasingly enquiring about the possibility of using stablecoins USDT and USDC as alternative methods of payment from traditional fiat currency,” said a senior analyst at the trading platform IG.

“They wish to make payments using these methods to invest in traditional asset classes - from equities to commodities, including gold.”

Thus, the growing interest in stablecoins lines up alongside that for Bitcoin and a couple of other cryptocurrencies as far as UAE and GCC investors are concerned.

Bitcoin remains stuck price-wise for now – it is ‘once again attempting to hold above the $118,000 level, remaining confined within a sideways range after failing to sustain gains above $120,000 in recent days,” says Samer Hasn, Senior Market Analyst at XS.com, in a note.

“The elevated valuations may leave the market more fragile and less capable of sustaining gains in the event of further shocks particularly those stemming from trade policy.

“Since cryptocurrencies do not move in complete isolation from equities, any downturn in stocks could trigger an even sharper correction in high-risk digital assets.”