Would you like to be paid by the second?

How would you like it if you were paid by the second?

Believe it or not, this is a very possible scenario in the future once cryptocurrencies become mainstream. What is now largely still a speculative asset is steadily gaining ground among traditional financial institutions and turning the world of global finance on its head, despite all the negative sentiment surrounding the collapse of FTX, the crypto exchange.

Close to 90 per cent of the current trade in cryptocurrencies is still speculative, with most people interested in making a quick buck. However, a small group of investors are in it for the long term, and this is where the revolution is gaining ground, said Talal Tabbaa, Founder and CEO of CoinMENA, one of the major crypto asset service providers.

“In crypto today, you can undertake any banking service without having to go to a bank. Let us take remittances. Crypto is a better way to send money around the world. I personally send money using USDC, a token that is linked to the US dollar. You can program your money transfers to send any amount 24/7, including any parameters. This can change the entire payroll administration system where you don’t have to wait every month to get your salary, you can get it by the second,” Tabbaa told Khaleej Times in an interview.

Dubai has been at the forefront of this virtual asset revolution. The recently-established Virtual Asset Regulatory Authority (Vara) in Dubai is the world’s first such body set up exclusively to deal with virtual assets. “Since Vara was set up, you have a steady inflow of exchanges, of businesses, of crypto millionaires moving to Dubai. This is going to have a very major impact on the industry,” said Tabbaa.

The biggest trend that cryptocurrencies are likely to affect is the access to credit. “The process of accessing credit from traditional banks is going to change as cryptocurrencies get popular. It will be much easier getting a loan through crypto. It is purely based on collateral. Say you have this amount of bitcoin, so you will get this amount of credit. You want to decrease your interest rate? No problem, just increase your collateral. This system of autonomous lending and borrowing, I would personally think, will change the world,” Tabbaa said.

While there has been a lot of concern raised throughout the financial world regarding the possible misuse of cryptocurrencies in funding illicit activities, Tabbaa feels things are different. “There is an increased awareness on crypto AML (anti money laundering) and KYT (know your transactions). The reality is that it is much easier to govern that is digital than to govern that is analogue. Chainalysis, an independent security firm, said in a recent report that 0.15 per cent of all crypto transactions are from illicit activities. That’s another thing that people are paying attention to – that are you compliant? Are you actually following the relevant rules and regulations? It’s great to see that because it shows that the crypto market is gradually maturing,” Tabbaa said.

This increased awareness and popularity are increasing the size of the crypto market in the region. “We think that in the next two to three years, we will be looking at a $400 billion market in the Middle East,” Tabbaa said.

As indications of this wider acceptance, CoinMENA recently entered into an agreement with Visa, the global payments firm.

Visa and Mastercard have around 140m merchants around the world, a figure that no single crypto exchange can reach by itself. “So the right way of doing it is to issue Visa cards for customers and they will have the ability to set it up in the back-end using crypto. This is something we are very excited to do with Visa as this means you can use CoinMENA as your personal bank account,” Tabbaa said.

CoinMENA also announced a partnership with Carlton Real Estate, a Bahrain-based real estate agency, that allows investors in the Kingdom to purchase real estate property using crypto assets. Under the partnership, the leading Bahrain-based real estate broker will accept stablecoins like USDT and USDC.

So what does the future hold?

“When asked about the future of crypto, I feel how I was asked about the internet in the 1990s. I think as a superior technology, it will end up in a similar way,” Tabbaa said.

And Dubai will be at the forefront of this wider revolution. “Just think of how many successful entrepreneurs have moved to Dubai in the past year. Credit goes to this country’s visionary leadership that sees this trend and was able to act so aggressively and launch Vara,” he said.

In other countries, crypto was really a sub-sect or department of financial regulators. “I think Dubai will become one of the beacons when it comes to crypto innovation and one of the major crypto global centres,” Tabbaa said.

Impact of FTX

The failure of FTX was the failure of a financial centralized entity and not the failure of crypto itself as a technology, Tabbaa told Khaleej Times when asked about his comments on the collapsed cryptocurrency exchange. “Having said that, it is important to note that many investors lost money and any time investors lose money there will be reduced confidence in the industry as a whole,” he said.

He stressed that this incident underscores the importance of working with regulators. “FTX was regulated in the Bahamas and that wasn’t the level of protection that investors would have, say, in the UK,” he added. “This incident reinforces the reason why we need to have decentralized systems. Centralized systems are based on trust and in many cases that trust can be broken,” he added.

Tabbaa cited the example of Uniswap, which is now the largest decentralized cryptocrrency exchange in the world. “You can see what exactly is there on the orderbook, you can see how many people are selling or buying, how many people are providing liquidity. But in the case of any centralized exchange like FTX you have to rely on their reporting so in one case you have to rely on trust, on auditors on systems that make sure that there are no bad actors and in case of Uniswap you see this yourself and do not rely on anyone else to facilitate your order,” he said.

In the long haul, for sure the decentralized systems will become more popular, Tabbaa says. “But the timeline for this is definitely now extended and the industry has been set back by a few years, especially for the traditional institutions – many banks and larger institutions will now sit out and watch.

• Business