In a significant move signalling the United Arab Emirates’ growing acceptance of digital currencies and their associated innovations, Komainu, a joint venture of Nomura, CoinShares, and Ledger, has been granted a full operating license by the Virtual Asset Regulatory Authority (VARA) in Dubai.
Launched in June 2020, Komainu has reportedly offered custody services to various clients, including exchanges, financial institutions, corporations, and government agencies. As per a recent release, this full operating license from VARA allows the company to extend its comprehensive range of custody services in the emirate. The Komainu Connect platform will enable institutional clients to deploy their digital assets in collateral scenarios while ensuring these remain in segregated custody, with the possibility of on-chain verification.
.@KomainuCustody has landed a full VARA license in Dubai
— Ledger Insights (@LedgerInsights) August 22, 2023
Recently, Dubai has positioned itself as a hub for cryptocurrency businesses. The formation of VARA in March 2022 as the world’s pioneering independent crypto regulator was a major step in that direction. Following this trend, several major crypto players, including Binance, the world’s largest crypto exchange by trading volume, have been granted business licenses in the region.
Commenting on the opportunity, Sebastian Widmann, head of strategy at Komainu, mentioned;
“We see tremendous opportunities to scale our business here amid a significant boom in assets driven by fund formation and exchange launches.”
Dubai’s proactive steps to woo crypto innovators
To further incentivize crypto businesses, the Dubai AI and Web 3.0 Campus is subsidizing licenses for firms interested in establishing their operations in the city. The responsibility for issuing these licenses will be shouldered by the Dubai International Financial Centre (DIFC), as the city anticipates an influx of global talent and a diverse pool of investors.
Komainu’s journey in Dubai commenced in July 2022 when it received preliminary operation approval. According to familiar sources, the subsequent acquisition of its MVP license from the Dubai regulator in November underscored the emirate’s willingness to nurture the crypto ecosystem and its associated technologies.
While Komainu’s recent licensure by VARA marks a significant milestone in its growth trajectory, it is noteworthy that the company is also regulated by the Jersey Financial Services Commission, with its headquarters remaining there.
In 2018, Komainu was conceived as a joint venture between the Japan-based financial behemoth Nomura, the blockchain entity Ledger, and the crypto investment firm CoinShares.
Challenges in the crypto landscape
Despite the burgeoning growth of the crypto industry in Dubai, challenges remain. One such incident involves the new digital currency exchange OPNX, founded by Kyle Davies and Su Zhu of the now-defunct Three Arrows Capital (3AC). Recently, VARA levied a hefty fine on OPNX and its founders for flouting local rules, especially engaging in promotional activities without obtaining the necessary approvals.
While fines against the key executives of OPNX have been settled, the $2.6 million penalty against OPNX remains outstanding, prompting VARA to consider “consequential actions”, which might include additional penalties or potential legal action.
In conclusion, Komainu’s full licensure by VARA stands as a testament to Dubai’s vision of becoming a global epicentre for cryptocurrency innovation. As the emirate continues to bolster its regulatory framework and woo crypto businesses, it remains to be seen how the broader industry will navigate the challenges and opportunities in this rapidly evolving landscape.