Why Dubai Wins

Transcript

Now we're going to talk about as we're expanding around the world in crypto. We're going to talk about Dubai and the UAE and really what made what's what's happening in Dubai when it comes to crypto. We're very very honored to be joined by the vice chair of VARA Deepa Raja Carbonell. I'll introduce her in a second. My goal with this session is very simple is to share with you here the Dubai story not only what's happening now but also the vision where things are heading and hopefully empower you with this information as as you're making your plans on a global policy perspective where to set up. We'll see if Dubai and the UAE has a role in that.

Deepa great to have you with us today. >> Thank you for having me. >> Fun fact by the way by Deepa. This is a commitment of the Dubai authorities. Believe it or not she lives literally next to her office. There's the VARA offices and she's literally 10 m there's even underground corridor for her to come to the office. I think for any other regular listening to this this is a sign of commitment. No excuses for being caught in traffic afterwards you know. >> That's true. No excuse but that also says that you know as a regulator should be able to have I mean we often talk about work-life balance right? The team is supposed to have one not the person that's sitting on top of it so.

>> It also from a BCP perspective hey you have it all there. Can we share with our audience a bit of your background I think your journey how everything you've done in Dubai. >> Yeah. >> But also how did the the genesis behind VARA and then we'll go deeper afterwards. >> Sure. Look I've been I've been in Dubai for almost 21 years right? So the early part of my life was in the US and then I moved up to Dubai to work with the Dubai World Trade Center which is an event and exhibition center but the the thing about Dubai that I find quite fascinating is they never box you in right? It It really matter where your career begins How your career evolves is very much based on who you are and what you want to do with it. And I think that's a very

much the genesis of the city as as a whole. The leadership as well as most of the population that comes in there. I I moved into I used to work with Dubai economy through COVID. And at that time we came up with the D33 plan. The Dubai 2033 plan, which was very much about the new economy. Whether it was virtual assets, but virtual assets were sort of the underlying, but it was very much about blockchain, metaverse, AI and such like. And underlying all of that was the world of crypto.

That's also when Dubai very quickly realized that the most of the world doesn't regulate this sector. And it wasn't at that time. So, what if we set up a regulator and made this a completely regulated ball and legislatable industry. That's kind of why I came around to setting up VARA about 4 years ago. Absolutely fantastic journey, I have to say. >> Can you share me with some stats with the audience where VARA is right now? Cuz I think it's quite impressive growth last couple of years. >> So, well, VARA is is currently at 58 as of this morning licensed entities. And when we say licensed, we mean fully regulated entities.

We've got a whole bunch, I think of more than 200 of them that have registrations, NOCs and such like. And so, if you look at just registered entities, I'm meaning licensed entities across the world, you'll find that this is the largest jurisdiction for licensed crypto. Yeah. >> It's incredible. And and I can say as a firm was licensed there, what I find incredible is I'm literally 1 minute walk away from all my counterparties. This is what people often don't realize. Imagine if all the crypto firms were in one tower of MBS and everybody is there. It's incredible often the tongue that's just happening even but just bumping into >> Indeed. This is an important point that you make, right, Henry? To to us it was important that we I mean, of course most regulators start with exchanges as we

did too. You get the bulk of the audience there. But if you don't have the entire gamut, if you don't have the broker dealers, asset managers, custodians, banking partners, etc. then the industry simply doesn't grow. So that interoperability even within the ecosystem is almost fundamental. That's the only way talent comes to your country, right? >> What have you found on the, you know, one even this last two days of the conference has been coming up a lot is that people are complaining that often regulators don't understand the space. What's been incredible with VARA is I always tell people half jokingly that the good thing with VARA is they know what they're doing. The bad thing with VARA is they know what they're doing.

You know, cuz there's so much expertise within the the regulator. You know, as to what extent you believe that was an an an an edge that that basically helped in the success of VARA? >> So when you say expertise it's an interesting one, right? Most of our our experts within VARA are cat-fight. >> Right? And And we're also extreme I mean, none of us are regulators, which is almost essential, I think. We're all people that we that are from private sector. We understand what it takes to make private sector work. And also as a consequence, we're there to listen, right? We're there to listen to the industry on what you guys need to to make your your businesses successful and adapt our

thinking to where you're coming from. So the consequence I would say say our expertise has evolved with the expertise of the industry. We didn't come born with that expertise, but we've been very I mean, humble enough to be able to gain that respect from the industry as well is what I would say. >> You know, you said listen. I think that's the one >> one great thing that I think VARA did fantastically well. I think that's what the crypto community was asking especially in the early days. We just wanted actually regulators that were happy to listen, accept, and actually come up with a set of rules that we can all abide with, but at least we know there's a level playing field.

>> cannot regulate something you don't understand, right? We can come with a set of rules that nobody follows, what's the point of that? So, it was very much about saying, um, how are you evolving? How are you guys thinking about it? And even if you look at your own world from 2019 to today, that's evolved so much, right? >> And what's the vision now? You think if we're having this session in 5 years from now in 2031 here, what do you think how do you what do you expect VARA to be by then? >> Let me ask you this. 5 years ago, if you were here and you were asked the same question, would you predict where we are now?

It would be a hard one. >> Yeah, exactly. >> Right. It would be a very hard one. And that's what I love about the industry, right? It's evolving at the pace of light, right? It and and the reality is it's not evolving for the sake of evolution. It's maturing with it, and you see this convergence of TradFi and DeFi, which you never imagined would happen 4 or 5 years ago. So, I do think that that level of respect that you've developed for each other will make this industry quite quite inter-possible. >> Sudeep, obviously, it's been a challenging year in the Middle East with all the events going on. I think it it's been as somebody who lives in Dubai, it was quite interesting to see how, uh, the everybody from leadership to

companies, to businesses dealt with it. I think it'll be interesting if you can share with the audience like what with this with the war going on, how does it impact Dubai, and how do actually what are the measures that have been taken to deal with this? >> Uh, look, I think anybody that knows Dubai also knows that, uh, we uh, we are very extremely responsive, right? We we normally aren't reactive to to disruption, but extremely responsive to it. And that's something I've seen for the uh, for this city, of course, for the UAE as a whole, uh, over the two decades that I've been there, probably more than any other jurisdiction, right?

Uh, but in this particular context February end of Feb was was when when all of this disruption actually started. But if you think about yourself included most of the expats that live there you didn't see many of them leave. >> So that >> You still there and you're there with family and I think that's a big differentiator right? When a person is there as an individual they're a little bit more willing to take a lot of risk but when you're there with your wife your your kids and children have to go to school and they're just you know the regularity of life can't be disrupted and I think Dubai has done a phenomenal job of that. I mean more than me you you should ask yourself right? That's that's

been the genesis of how the leadership has actually dealt with it. It was the very first meeting was had by the leadership with the industry in February as soon as the disruption broke out and their whole purpose was to say what is it that we can do for you to make you feel safer in this place in the in the situation that we can't really control and it's not in our control for the large part right? But what can we do to ensure that businesses don't get disrupted life doesn't get disrupted and 3 months out you didn't see very much change in Dubai.

>> Fortunately traffic is back in Dubai now which >> Traffic is back in Dubai. >> It's on that aspect. What do you think actually what like I've always been wondering this so what in your opinion not motivates but is the genesis of the leadership being so on top of things like being proactive listening to people you know like what what do you think is driving this? >> Look I think the city is made from from a nation that understands it's built by its people right? Whoever it attracts from every corner of the world. You've got 200 nationalities that live there it's about the microcosm of the world that you can ask for and as a consequence everyone relies on each other being supportive to the nation as

a whole. The amount of loyalty you'll find in Dubai towards being it's it's a very sticky place, right? It's very hard to leave once you get there. And that's really because it's not because somebody is forcing you to do it, it's because you really want to. >> When you meet you know, you know, other regulators or other heads of state and everybody wants to be the next Dubai. Back in the day everybody wanted to be the next Singapore, the next Hong Kong. What is the one thing often you think they lack that is making it difficult to achieve what you've been able to achieve? >> Look, I'll tell you what. One, of course, Dubai has some natural benefits of being right in the center of the world between your between the four to six hour flight path you've got, you know, two billion

people. So, you've got the the natural market that comes around you, right? That's that's one thing. As far as bilateral trade relations, we probably have the strongest of any nation on the planet, right? And so, as a consequence, you naturally have a lot of these parameters that have already been set up. You know that it's a nation that that is generally small in terms of the population base and it's a it's it's small, right? In terms of geographic presence as well. But but what it's built for itself in terms of repute is simply the fact that it can always be reliable, right? You will not find any disruption in the kind of relationship it has with most nations. Global sort of cross-border relations are phenomenal.

So, traditional industry has always worked extremely well out of Dubai, but you also find that new industry. So, one of the first things we did coming out of COVID was look at new economy, whether it is AI, blockchain, metaverse, all of those kind of things. But also today it's the world of longevity, right? And and the advancements in preventive medicine as opposed to corrective. So, those are the kinds of frontier thinking that the leadership will always think about. And they say, it doesn't matter that it's not regulated. Let's talk about how we can bring it to market." >> It's impressive. I just found out about this recently that there is a a new regulator being launched in in Dubai called the Dubai Longevity Authority.

>> Yeah, that's right. >> Try to actually exactly like crypto was a couple years ago. There's all the innovations, how we come up and listen to them and put them together. I mean, it's actually and you can take a lot of the learnings from VARA, ironically, and put them into this Dubai Longevity Authority. >> Look, um virtual assets is one thing that people have a choice to say I participate or don't. Longevity is something that I guess all of us have to, right? It's about where we get to with our lives and preventive is always better than corrective. So, yes, this was a regulator launched back in June, and um and yeah, we're pretty much active right now.

>> What is the one thing you think people get wrong about Dubai from outside? Like the average person is looking at Dubai from the outside, what do you think they get often wrong? >> If if you want to think about the next frontier where innovation is going to lie and where you may want to participate, that would be the same. It would be the nexus from where that idea can take root, but more importantly, from where it can be passported to the rest of the world. >> Interesting. And you think often they they they when they look at Dubai, they don't they still the flashy and they don't get the get the get the wrong image? They get >> Well, I mean, flashy is always there, right? It's a it's a brand associated with Dubai, but when you come to Dubai, you'll realize that that that is that is

a very different uh a very different ecosystem. It's very down-to-earth. It's actually very normal, right? >> What surprised you the the most in this whole experience of building uh VARA? Like, what was the one thing that you found the most surprising that you didn't expect as when you embarked on this journey? >> I I would say the collaboration we got from the industry. We were expecting the industry to be quite stand-offish, as I'm sure the industry expects the regulator to be stand-offish, right? And we found the level of um I think willingness to participate, to engage, uh to actually come to the table and have a very humble conversation with the regulator, not because you wanted to get regulated and have a check box exercise,

right? But really because you wanted to to be in in a in a very responsible sector. And that transition happened from I would say post 2019. >> Wow, interesting. What is the you know, one other comment we hear a lot about the the UAE there's are so many different regulators that's confusing. You have VARA, you have CMA on the onshore, you have ADGM, you have the FSA. First I think it'd be interesting if you could explain to the why that is the case, but how to best to deal with that as well for the for the audience.

>> Look, you're right that there are multiple regulators, but it's a very cohesive system once you get to understand it a little bit better. Firstly, VARA regulates mainland and free zones of Dubai. So all of Dubai is regulated by VARA, right? Now, there's two financial free zones in the UAE. One is the DIFC and the other one is the ADGM. Those two I have their own independent regulators, which is the FSRA and the DFSA. So they do not regulate anything on mainland, but they've been there for several years, more capital markets regulators that also do a phenomenal job in the DeFi world. The CMA, which is the Capital Markets Authority, is the federal authority. They regulate the six of the

seven Emirates and the seventh Emirate being Dubai for virtual assets. They regulate capital markets for all of the Emirates. Our relationship with the CMA is phenomenally tight, meaning that there is a lot of cross pollination that happens between our ecosystems. There will be entities that are licensed by us that could get a passporting with the CMA to be able to operate across the UAE and vice versa. The same with ADGM and the DFSA. They would uh the DRC equation, we've got MOUs with both those parties.

It's not passportable just yet, uh but that will eventually arise at some point. Yeah. >> It's interesting, you know, the also the image I remember in the early days of of Dubai, people would think, "Ah, if you want something easy, quick, well, come to Dubai." It's in I tell everybody, even as a regulated firm, we have weekly reporting. You know, and it's the the level of actually uh the the good thing of VARA because there's so much expertise, you actually feel more comfortable being regulated by a regulator who understands the space. Yeah. It makes it makes it so much better, but I I find it's uh the the the the this image that back in the day people had, "It's easy, we go to Dubai." People don't realize how how much there's uh strict provision.

>> So, actually, it's a fantastic point you make. If you If we wanted to be the jurisdiction of least resort, >> we could have easily done that in the first year, right? The fact that you set up a regulator by default means that you really want to try and ensure that the industry um is is operating for the most responsible, but it's also market integrity, which is foundational, right? >> I tell everybody, if you're looking for a place to actually set up and do things half-assed and easy, do not come to Dubai. We don't need you. You want to build a real business, build a scale, and build a future of money, future of finance, more than welcome, and I'm sure Deepa and the others uh Paul and others are in the room will be happy to welcome you, but uh I think it's been it's been

great. I really I speak on behalf of the, you know, I've been privileged to see this this ecosystem for the last 12, 13 years. Uh there was a time where nobody wanted to talk to us, uh literally, and uh really Dubai, the UAE, opened opened the doors and arms out to listen to us, and now, I mean, obviously, you're seeing all the success that VARA has had, and I truly believe that without the role that Dubai, the UAE, played, especially the last 2 or 3 years, uh especially before the shift of policy in the US, I don't think the crypto industry would have been where it is right now. So, there's a really in the history of crypto, there'll be a chapter on Dubai for sure.

>> Thank you. >> For sure on that perspective. Deepa, anybody comes on stage with me, whether you like it or not, my best friend the bell is here. So, I'm going to ask you quick questions and I and I I want one or two word answers and we're going to take it from there. >> You like ready? >> All right, let's go. >> Here we go. We're in Singapore this week. What's your favorite thing about Singapore? >> I have to say it's not the weather. It's very comparable to Dubai, but I would say it's green. >> Here we go. What's your favorite thing about Dubai having been there for 20 years? >> I've loved the the internationalism of the city.

>> What's your favorite thing to do when you're not busy running VARA or the other authorities or anything else? >> I'll be on a bike. >> On a bike? Interesting. And go what's what's uh Okay, what's what's the one thing that inspires you the most now? >> Inspires me the most. I will say to see where the next genesis of VARA takes us, right? I really would would like to see how tradfi and defi come together in a way in which it can self-sustain and actually grow phenomenally larger than where it is today. >> Amazing. If you had one piece of advice to an 18-year-old in the room, what piece of advice would you give them knowing what you know about policy making and everything else?

>> I would say regulators aren't half as bad as you may think they are from the outside and if anybody actually does want to get into the space when you are studying, whatever it is that you are, you should think about policy. >> What's the one course you would take if you would go back to school today that you wish you had taken back in the day? >> Public policy. It would be >> If anybody in the room, there's a young person looking for their first job, they're debating between a consulting firm, startup, the government, or regulator, which job would you recommend they take? >> As the first job out of school, I would definitely definitely think private sector. So, you should >> Interesting.

>> Yes. I I think consulting is where I went as as my first job and I think it gives you a grounding more solid than anything else. >> And then you go to the regulator. >> Regulator, yes, because otherwise you don't understand what you're doing, >> So excited to finish it off, Deepa. The question I ask everybody who comes on stage with me, you could have lunch or dinner with one person dead or alive. Lunch or dinner, one person dead or alive. Who would you have lunch or dinner with? >> I I did I did get asked in the previous panel. I said Newton and I'll stick with Newton. >> Isaac Newton. >> But why is that? Why is it Isaac Newton, by the way? >> Right. It just something that that creates the beginning of science in the minds of kids.

>> Here we go. >> It's always good to have that. >> Listen, people thinks bring gravity back to earth, but I guess Dubai goes it always goes up, which is good on that perspective. Guys, thank you very much. Deepa Rajagopalan, vice chair of VARA. Thank you very much, everybody.