UAE Crypto Market Enters Institutional Phase As Regulation, Custody Infrastructure Drive Growth

(MENAFN- Khaleej Times) Dubai's crypto and digital asset ecosystem is moving into a more mature phase, marked by institutional participation, regulatory clarity and the build-out of market infrastructure, and expert said.

“The UAE has moved past the 'let's see what this is' phase and is now firmly in the 'let's build real infrastructure around it' phase,” said Manan Vora, Executive Director and General Manager at First Answer Custody FZE, highlighting a shift in market focus from early-stage experimentation to long-term development.

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He added that conversations in the sector have evolved significantly.“A few years ago, most conversations here were about whether crypto was legitimate. Today, the conversations are about settlement finality, institutional-grade custody, and how to onboard a sovereign wealth fund or family office into digital assets safely.”

Dubai, in particular, is positioning itself as a global hub for institutional digital assets rather than retail-driven trading activity.“The focus has shifted from retail speculation to institutional infrastructure. That's the hallmark of a maturing market,” he said, although he cautioned that improvements are still needed in areas such as market depth, interoperability and cross-border recognition.

A key driver of this transition is regulatory clarity. According to Manan Vora, frameworks introduced by Dubai's Virtual Assets Regulatory Authority (VARA) alongside federal regulations are helping remove uncertainty for institutional investors.

“Regulation doesn't kill markets - uncertainty does,” he said.“When a bank's risk committee or a fund's investment committee asks 'is this allowed?', there's now a clear answer. That's transformative.”

The result is a shift in engagement from hesitation to execution.“Conversations that used to stall at 'we're waiting for regulatory clarity' are now moving to due diligence and onboarding,” he noted, adding that institutions“don't need crypto to be risk-free; they need it to be risk-manageable.”

At the same time, tokenisation of real-world assets such as real estate and commodities is gaining traction, offering potential to unlock liquidity and broaden investor access.“Assets that are currently illiquid, hard to divide, and slow to transfer can become liquid, fractionable, and near-instant to settle,” Vora said.

However, challenges remain. Legal definitions of ownership, integration between blockchain systems and traditional registries, and secure custody of digital assets need to be addressed to scale adoption effectively.

Infrastructure - particularly custody and compliance - is emerging as a critical enabler of institutional growth. Vora likened digital asset custody to the foundational systems underpinning traditional financial markets.

“Custody for digital assets is exactly that moment right now... it's the layer that converts 'technically interesting' into 'institutionally viable,'” he said.

As banks and financial institutions move from pilot projects to live deployments in the UAE, the emphasis is increasingly on security, auditability and regulatory compliance.

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