Dubai is currently home to more than 1,000 companies engaged in the metaverse and blockchain sectors. These companies add around $500 million to the nation's economy. The government of Dubai aims to create laws and infrastructure to accelerate the adoption of these technologies and establish international standards for creating safe and secure platforms for users. The country is also capable of attracting and retaining the world's largest technology firms and has always been a forerunner toward the adoption of blockchain technology.
According to a Bloomberg report, Dubai seeks to become one of the top 10 metaverse economies in the world, with the sector expected to generate up to 40,000 more virtual jobs and add $4 billion to the GDP over the next five years. In the year 2016, the UAE government announced an ambitious plan to use blockchain for all government documents in an effort to create the world's first fully digitized government.
In 2016, the UAE government also formed the Global Blockchain Council, a body comprising government agencies, banks, and technology firms, with the goal of implementing and scaling a technology that, at the time, was still very much embryonic. Since then, the city has piloted a number of ground-breaking blockchain projects, exploring innovative use cases across a range of disparate sectors, from transportation and health to municipal services and education.
Dubai also celebrates a new milestone, announcing a joint initiative with IBM and Smart Dubai that represents the first government-endorsed blockchain in the Middle East. Let us look at how the country is leading the innovation and development of Metaverse with the help of regulatory authorities and the government of Dubai.
Dubai's Entrance into the crypto and metaverse spaces
A number of businesses are seeking to bring the Metaverse idea to life in the UAE by fusing social networking, gaming, investing, virtual real estate, business, NFT creation and trading, entertainment, and retail inside a fully immersive virtual reality environment. Dubai is experiencing enormous expansion with projected smart cities using blockchain technology for infrastructure, governmental, and public services. This will lead to the development of the virtual world with a grand vision like Metaverse.
The commercial potential of Metaverse is primarily around AR/VR hardware, online games, and gaming hardware followed by live entertainment and social media. Bybit, a cryptocurrency exchange, announced it would open its worldwide headquarters in Dubai under the guise of a government that was supportive of the industry. Two other popular crypto exchanges, Crypto.com and FTX announced they would set up shop there.
Some of Dubai's largest corporations have stated they are utilizing the metaverse technology more and more in their operations. Damac Group, which consists of the worldwide real estate developer Damac Properties and the clothing label Roberto, announced in April that it will invest $100 million to create digital towns in the metaverse. Emirates, a Dubai-based airline is set to increase its usage of NFTs and the metaverse. Additionally, UAE healthcare company Thumbay Group intends to open a virtual hospital in which patients may consult with a doctor by October 2022.
Apart from these major corporations, Dubai Investment Fund (DIF), a global investment company headquartered in Dubai, is also tapping into the potential of blockchain technology and its applications like NFTs and metaverse development. Cryptocurrency and blockchain space is one of the key investment sectors of DIF along with other sectors like real estate, renewables, financial institutions, commodities, etc.
DIF was among the first-ever companies in its region to introduce a digital platform for clients and investors in its infrastructure update in 2007. The introduction of broad-based digital infrastructure allowed its clients to use modern technological tools to access better market analytics by simplifying investment insights for core clients. Having over 7,000 private and institutional clients in more than 60 countries, DIF serves a wide variety of clients including pension, sovereign wealth funds, family offices, insurance companies, etc.
Metaverse regulatory authorities in Dubai
Dubai passed its first virtual asset law in March 2022 and established the Virtual Assets Regulatory Authority (VARA) for cryptocurrency businesses, which has already given licenses for operations to some of the biggest cryptocurrency exchanges in the world, including Binance and the European division of FTX. Dubai's VARA became the first regulator with a foothold in the emerging digital space when it launched its Metaverse HQ in May'2022.
VARA's MetaHQ uses the Sandbox platform, an Ethereum blockchain-based application that enables users to create, sell, and buy digital assets. By extending VARA's resources outside of its borders, Dubai intends to develop a working prototype of a decentralized regulatory regime. Additionally, it aims to make it easier for corporates, government authorities, and virtual asset providers to shape the digital economy.
A report from the crypto investment firm Grayscale Investments estimates revenue from virtual gaming worlds could grow to $400 million and overall the metaverse could represent a $1 trillion market opportunity by 2025. Dubai seeks to use the metaverse technology to its advantage so that it may create commercial possibilities outside of its physical boundaries. It is putting actions and programs in place that will improve its web presence. Further, it is continuously trying to create a legislative framework that will serve the requirements of all sectors in the future.
High Economic Aspirations
The UAE government considers Web3 as a significant component of its ambitious commercial goals. It maintains that tokenization and cryptocurrency will be crucial to the Arab country's effort to double the size of its economy over the next ten years. Dubai holds a tremendous potential to grow its innovation around the metaverse development, considering the country's major corporations' involvement in cryptocurrency and blockchain applications.
Major corporations across the world are estimating the metaverse market to grow substantially and reach the trillion dollars mark in the next few years. However, some businesses, such as Big Four accounting firm KPMG, have claimed that these numbers could be excessively cautious. Dubai is not the only city, though, that has a strong interest in the metaverse. Shanghai, the largest city in China, recently invested billions of dollars to develop its own virtual economy. Metaverse may achieve widespread acceptance sooner than we anticipated if things continue this way.
