Intriguing times in the realm of cryptocurrency regulation, particularly with recent developments taking place in Dubai. Komainu, a celebrated partnership between Nomura, Ledger and CoinShares, becomes the latest to join the roster as it garners an operational license from the Virtual Asset Regulatory Authority (VARA), marking a significant stride.
Leveraging on this approval, the company aims to extend its full gamut of custody services to its Dubai-based clientele, through the Komainu Connect platform. The services offered go beyond mere storage, encompassing institutional staking and collateral management. A salient feature involves the ability to deploy digital assets in collateralization scenarios with segregated, on-chain verifiable custody promising more secure transactions.
However, one might raise an eyebrow at this advancement, pointing towards the nascent regulatory atmosphere of Dubai. It was only in March 2022 when the UAE introduced VARA as the world’s first independent crypto regulator. As such, it is worthwhile to consider whether the claims of robust regulatory oversight live up to the expectations that regulators in more mature, time-tested jurisdictions might provide.
In the same vein, one cannot help but recall Binance, the world’s biggest crypto exchange, earning its license to operate in the region as recently as July 2022. More attention was focussed on the region when Laser Digital, a digital assets division of Nomura, was also granted a VARA-approved license.
While these advancements make it appear as though Dubai is the new crypto frontier, one cannot disregard the potential risks. Are we seeing a boom in fund formations and exchange launches merely because of lax regulatory environments, or are these actions genuinely mirroring the prospects in the emirate? After all, Sebastian Widmann, the head of strategy at Komainu, seems to be highly optimistic about the burgeoning opportunities to scale their business in the region.
Existing since June 2020, Komainu offers its custody services to a range of entities like exchanges, financial institutions, asset managers, corporations, and government agencies. As it navigates the freshly chartered waters, the question that lingers is whether Komainu can maintain the balance between leveraging the opportunities in this more lax regulatory environment and the risk that may potentially face its clients, given the distinct short history of VARA.