The Gulf's Approach To Regulation Is Refreshing For Global Investors

As an Australian fintech investor who has long operated from Estonia, a move to the Gulf may not make much sense on paper.

I am proud to be based in Dubai, where I meet most days with like-minded founders and innovators keen to explore the next opportunity. Owing to the welcoming regulatory landscape, I have looked to the GCC region for investment opportunities, investing in Bahrain and UAE-licensed crypto asset service provider CoinMENA as one example.

I have previously spoken about the Gulf's climate of entrepreneurship, which has resulted in its growing reputation as a supportive, stable destination for investors, particularly those in the Web3 space. Central to this has been a willingness to embrace new technologies and invest in regulatory frameworks that support them.

Gulf countries like the UAE and Bahrain have managed to cultivate a conducive environment for commercial activity across multiple sectors through an approach which looks to work with businesses, not against them. They have often sought expert Western counsel on how best to go about this, a tried and tested method that will no doubt continue to bear fruit.

These countries' willingness to invest large sums in infrastructure and liberalise socioeconomic policies has fostered a deep culture of entrepreneurship. This further helps economic diversification strategies and cements the region's reputation as a leading technology hub.

Through continued market reforms, the GCC is showing the world through action that it is willing to go the extra mile to maintain its edge as a global hub for trade, tourism, and technology, with cryptocurrency and AI as two key areas of focus.

Taking the former, countries have long struggled to provide investors with clarity around Web3 technologies, resulting in widespread industry uncertainty. The Gulf, on the other hand, has adopted a refreshing alternative approach.

For example, in 2018, the UAE issued clear legislative guidelines on crypto. It has sought to bring clarity to a sector long ignored by governments, enabling innovation to thrive. As a result, crypto and Web3 investors have flocked to the country to launch their businesses.

Bahrain's Central Bank followed suit, announcing a legislative framework to oversee and manage crypto assets in 2019. Last year, it broadened the scope of tradable securities to include crypto assets.

A recent Economist Impact report has highlighted the importance of supporting financial infrastructure through investment and regulatory assistance and creating future guidelines. By 2027, some market analysts predict that digital assets could constitute over seven per cent of institutional portfolios.

With AI, the GCC region has again shown nimbleness and a mindset to embrace new technologies.

The UAE was the first country to appoint a Minister of AI in 2017 and aspires to be an AI world leader within the next decade. Some reports indicate that AI could contribute $96 billion to the UAE's economy by 2030, equivalent to 14% of its total GDP.

Most recently, the UAE's General Commercial Gaming Regulatory Authority (GCGRA) awarded its first-ever lottery license in July. Some estimates suggest that legalised casinos (and other forms of gaming) in the country could generate $6.6 billion annually, surpassing the total amount generated by Singapore.

In rapidly developing areas like AI, the Gulf again shows a unified business-friendly attitude to ensure businesses are supported as they establish their operations.

In some cases, clear national strategies are in place that aim to foster public-private partnerships to accelerate AI adoption. Other countries, like Qatar, though they lack legal frameworks around AI regulation, still aspire to support those in the sector looking to enter respective markets.

Investors like me always want clarity. The Gulf region offers this more than other jurisdictions, which have sometimes sought to stifle innovation in pursuit of excessive bureaucratic red tape.

The GCC remains an ideal investor landscape owing to its regulatory clarity, established frameworks that nurture innovation, and stable governments that are willing to support new technologies.

Long may this continue.

About the author:

Tim Heath is GP of Yolo Investments, a leading technology venture capital firm, and the Founder of Yolo Group, a company operating leading crypto gaming brands including Bitcasino.io and Sportsbet.io, with the latter securing high-profile sponsorships with Arsenal, Newcastle United and Southampton FC. Since founding Yolo Investments, the firm has rapidly grown to the point where it now supports more than 70 businesses across five funds, with assets under management of more than $500 million.