Building Bridges: Cross-Border Collaboration Between UAE and Europe | EBC11

I guess uh thank you for showing up right after lunch. Let's do a quick show of hands. Who's been to the UAE in the last 12 months? If you just want to raise your hand. All right.

Okay. Maybe a third. The good answers on stage. Exactly. Cool.

Um today we're going to unpack UAE European collaboration in the space. Uh it's a partnership powering real world adoption. actually really excited to uh kick off festivities here. So I'm Neil. Um most relevant to this panel, I actually lived in the Middle East for about 15 years growing up as a kid.

I've been going back for about 30 plus years at this point. Invested hundreds of millions of dollars in both Europe and and the Middle East over the last several years as well. So with me are two really good friends and experts on the topic. I don't know. I'll let let the two of them introduce themselves.

Hi everyone, Basel Ascari, co-founder and CEO of MidChains. We are an institutional OTC desk operating in Abu Dhabi and Dubai. We've been in the space since 2018 and we're one of the few firms that's actually backed on the equity side by two sovereign wealth funds. So, Mubadla and Lunate.

Hi everyone. Uh this is Mikayella. I'm the regional head for Backpacking Europe. Um Backpack is basically three things as of today. On the one side fully compliant centralized exchange.

Um on the other side multi-chain non-custodial wallet um and it's also the project behind Madlats which is the top NFD um community on on Sena. We are a fully compliant exchange got regulated uh vivara in Dubai back in 2023 um and now have entered the European market with the acquisition of a myth license entity here. uh basically been working full-time in crypto for the last six seven years or so and the last 15 years working in finance.

Awesome. Well, we have a lot to get through and it's a pretty short 20-minute panel. So, let's dive right in. Midchange thrives with UA's fiat flow advantages. What makes UA European collaboration click and practice today, Basel?

So, the easy lowhanging fruit there is actually Euro denominated trades. So that we've actually seen growth in Euro trades um especially in the last year since a lot of companies have started to move or set up offices in the UAE. effectively doing crossber remittance into company for a lot of corporate balance sheets has become a fast growing segment of customers who we serve and um it's been interesting to see and optimize flows not on the not only on the crypto side but also on the fiat on and off ramping for access to the crypto market. So that's been interesting to observe.

Awesome. And Michael, I know we talked a little bit before about this. You know, Backpack is really trying to be fully compliant globally, but it's not really about global passporting, is it? It's really about playing to local nuances. You know, why is local nuance the key to success in how you roll out backpack?

Yeah. I I I mean, so taking a step back, I think it's very important to to understand the world we live in. uh we basically live in a world today where there are like two dominant countries like US and China who are competing with each other for both industrial and economic dominance. Um and in such a context um I think there is a need for let's say neutral third parties that enable the collaboration between them. Um and not only on the physical world but also on the digital world because of like as a consequence of of this uh competition between the the two superpowers basically there are two blocks that are being structured.

uh I think in in in that context obviously the European Union on the one side and UIA have to play a very significant role as this neutral states that can provide the economic flows and cooperation between between these two regions. No. Um and in the same way as Bitcoin and Ethereum and Solana and neutral blockchains can can do. Um having said that and and thinking of us as a financial institution eventually you have to understand that finance is very very local uh access to services uh taxes uh accounting standards even things as culture as mindset as language are um extremely local. No.

So you have to understand that wealth as of today is offchain. If you want to bring that wealth onchain, you definitely have to interact with the traditional financial system um and the system is extremely local. You have there are tons of tiny details that you have to take into account in all those fronts basically to be able to to serve uh each and every one of those uh jurisdictions. Uh unfortunately there is no like this single value proposition or the single approach that you can um plug in to different regions. uh reality is very complex and and you have to to account for that.

Awesome. And actually on that note, question to both of you. So I mean regulators when we're sitting here in 2025, regulators are our friends. I've actually been saying this for years as well and I think we probably all have up here on stage in private and public circles. How are the local regulators really helping both of you or each of you I should say with product rollouts and broader adoption in the respective geographies UEI and Europe?

I'm going to spend a bit of time talking about the the regulatory landscape in the UAE because it's a bit more complex than most people realize. There's the virtual asset regulatory authority in Dubai who we operate our OTC business under. There's the Abu Dhabi global markets who have their own independent framework on a state level and there is also the central bank that provides a federal view on regulation in the UAE that governs activities like banking and payments but not necessarily for example trading and investments which is slightly different. So as you know we started our journey with with um ADGM we had one of the first licensed exchanges and custodians in that jurisdiction. um product rollout at that early stage, let's say between 2018 to 2022, um was a much harsher negotiation with the regulator.

It was much more educational from the perspective of having them understand that in fact, you know, these products were acceptable for certain investors to be able to access. Um and so that was a interesting journey to see them go from okay we want to be told what does the market want and why is it safe to they come around and propose to us what do you think of this product what do you think of that product to now um which is our operating framework with VAR where effectively we agree a framework and so long as we have products that fit within that framework we can offer them in a compliant way to our clients um be those high netw worth individuals or institutions that are either investing or using the assets for payments. Um, so I think the space has has evolved a lot and I think you know also not many firms can say that have actually sold the license which we did earlier this year. So that was an interesting experience. The regulators were also very supportive of a clean transition to the new owner for that particular license that we had sold earlier in the year.

And so that tells you that the the maturity on thought for how um our sector gets to be regulated has improved tremendously at least in the UAE. Um we've seen Mika come up as well and although I don't have too much experience in it, I'm sure Michael does and can explain it much better than I could.

Yeah. I mean so I I think regulating crypto and regulating digital assets is extremely complex. Eventually it happens as with any technological innovation. You basically have all the frameworks that do not fit the new reality. When you look at digital assets is like they are but they are not commodities.

They are but they are not equity like or debt-like instruments. They are but are not exactly um securities not. Um so I I think the good thing about both Europe and uh the UAE is that regulators have been forward thinking and have been able to develop uh specific frameworks for those and provide clarity in terms of legal status in terms of tax status uh in in terms of customer protection and so on for for those assets. um specifically in the in the in the case of Europe and and one of the issues that that we have here is that there is not yet such a thing as a single market. Uh we do have a global a European regulation for digital assets that covers um spot spot trading and and fiat onramps.

Uh which is being applied in the different countries with a slight nuance. Um and we have myth 2 which is basically the the regulation that applies to other financial instruments such as derivatives and and so on. No. Um good thing as I said is that there's a framework there's clarity around like the type of things that you can do and cannot do. Um there's clarity about the things that you can communicate.

There are things about the products that you can offer and all of that. Um the nuance is that there is no such a thing as a as a global regulation. There are a lot of jurisdictions. Uh there are a lot of different countries. There are a lot of regulatory entities.

And depending on the type of product that you have, the type of business that you have, the type of customer that you want to serve, uh you will have to get in a lot of nuance and a lot of details in each of the countries. No. Uh but at least you have that the starting point of okay something that is written in stone around like how to deal with with digital assets.

Fascinating. And and kudos basil. I don't know too many uh regulated entities that have actually sold the license uh over time because you I guess have coverage elsewhere. Uh let let's switch gears a little bit. Let's talk a little bit about market maturity and maybe I'll I'll give you the first question here.

Um you know retail compliance ops these are core for backpack. You know what's been the reality so far of scaling to retail in in UAE versus Europe? Have you seen differences? Is it

been largely the same with different efforts? Would love to get your perspectives. I I I mean I think the two key difference between trying to scale a business in Europe versus UAE, it's I would say market fragmentation and density. Like Europe is home to more than 40 different countries. It's home to people speaking more than two different I mean 200 different uh regional languages.

Um and obviously there is no single message that you can give to all the audience that it scales in the whole region. you know, you have to to account for all that fragmentation. Um, and also the the other key issue of the European ecosystem is the the the little density like in the UAA you have two big habs. Um, and in those habs you have great talent density, partner density, customer density. In Spain, in in Spain and in a whole of Europe, you have tens of cities where you have sizable networks.

Uh but it's extremely difficult to like tap all of them at the same time. No. So so you have to to deal with that complexity. Uh travel much more uh try to be more much more present in much more places. Um and and and that's probably the the the the hardest part.

Awesome. And I guess we're all sitting here in Europe. So maybe let's learn a little bit more about the UAE for a second. Basil, I mean institutional demand has been absolutely surging, right? I mean for you with sovereigns, family offices, I mean I don't want to say VCs but everybody in the ecosystem even corporates you know where where is the strongest momentum at the moment you know how are fiat rails enabling this who are you partnering with just give us some insight into that

I think I think it's always interesting to look at the trend for the last couple of years initially we would see most institutional deal flow coming from asset managers of different types now those could be family offices they could be high net worth indiv individuals, investment companies of different types, whether VCs or sovereigns or whatever. But the main purpose of entering crypto was investment essentially. And to put it simply, um what we've seen evolve in the last couple of years are two things. One is the migration of companies from specifically Europe and East Asia to the UAE that are opening local operations and scaling those local operations with partners like us who have been on the ground for some time. Um fiat flows are a big part of enabling corporates to enter the the space and so having access to multiple currency bank accounts for transactions has enabled this.

We've observed dollar and euro transactions actually scale down and local AED or dirham transactions scale up and I think that's a function of those firms having kind of moved across border. The last and probably most important sector of institutional adoption we are seeing are non-investment companies. So, corporate balance sheets for treasury purposes using mostly stable coins to effectively do crossber payments. Um, I know Tether is is not um as popular in Europe as it once was, but it's still extremely popular in the UAE. And we do a lot of trading volume essentially on and off ramping into stable coins for corporates that demand it, whether it be for purpose of, you know, commodity trading or spot commodity trading or e-commerce or any number of real estate development projects.

There's lots of things that are essentially accepting crypto as a method of value transfer and payment. And so I'd say that's definitely the fastest growing segment and probably what forms the biggest bulk of our daily trading volume today.

Fantastic. And actually similar question to you, Mico. I mean I mean on-ramps are driving so much of flow. Uh and I'm I'm personally and professionally as my company customers of of backpack right so you know how are your corporate relationships really growing in this market? Uh what are your banking relationships like as well as you think about you know being in many places all at once?

uh it's extremely important like as I said the fact is that the wealth as of today is offchain uh banking relationships are the bridge of traditional finan wealth to to onchain wealth um and basically your ability to provide regulated services in which in each of the jurisdictions in which you operate having the ability to have banking partnerships in in each of the jurisdictions in which in which you operate define how good or how bad your bridge is and your ability to bring uh capital from from the traditional financial system to um the onchain world. Um so for us it's it's a critical part of our strategy getting regulated having the right banking partnerships. Um and that's what what we do let's say currency by currency market by market bank by bank.

Awesome. So few minutes left to go here. Let's switch gears one last time. Let's talk about ecosystem growth. So Basel and we were previously speaking before this panel.

You talk giving some great examples about how land is being tokenized. You know there's a handful of partners coming into the ecosystem that are just using the technology using the rails using the adoption and furthering adoption through that. I guess what makes tokenization a game changer perhaps? Maybe that's a good first question to start with. I think that this is an extremely kind of UAE biased u positive I would say news in the sense that um the space we've all been talking about sort of RWA tokenization or security tokenization or different assets uh to be essentially put on the blockchain and recognized for legal ownership transfer.

Um what the challenge that has always kind of existed for adoption of such products is a legal framework which recognizes that the owner of the token actually does own legally the underlying asset. And so I still haven't seen that in a lot of countries in the world where people are talking about you know RWA tokenization which I think in with today's products is pretty straightforward. Um but what still isn't straightforward is is essentially getting that sign off where where I think we've seen a huge bit of innovation legally in the UAE is in twofold. One um which is now in practice is the Dubai land department has actually issued specific licenses to tokenize uh property title deeds. And so today um there's been about 10 billion of transaction volume in notional US dollars of title deeds being traded um as tokens in Dubai for for essentially real estate investments or fractional real estate investments which is incredible.

Um the fun fact is that Dubai real estate has actually outperformed Bitcoin. Um even though I was I'm more of a Bitcoin person but still it's a fact. Um the other thing which is super interesting is we've been granted actually one of the first licenses and we will go live at the end of the year to legally offer private market securities. So essentially tokenization of private um private essentially companies either on the equity or on the debt side and to offer that as a token investment. Um so that's exciting from our perspective considering that uh the securities and commodities authority of the UAE do recognize this now as a viable product and essentially the investors of those products can be protected and I think that's kind of the core of what we've been trying to figure out how to bridge in terms of getting the products adopted.

Now uh you know is something that is recognized in the UAE going to equally be recognized elsewhere? probably not because regulatory is highly localized and kind of complex but you know at least you know if you're an investor in one of these products um and your investment is held in the UAE that it is legitimate and it can be enforced if something goes wrong for example which is really important for institutional adoption which is the area we focus on

actually that's really nice because fantastic segue to actually talk a little bit about Mikuel and backpack I think you guys have just I think maybe yesterday announced a new tokenized stock partnership. So tokenization is taking place in other parts of the world, but it is slower to adopt. I think the regulatory landscape has been very frighteningly in the UAE for this for very many good reasons. But Muel, I know beyond tokenized equities, you've been broadening your offering stock, I mean tokens, derivatives stocks, and a handful of other things. Would love to talk a little bit about how you're bringing those products to an increasingly adopted crypto user base.

Yeah, eventually like the way we think about ourselves is like a player that is trying to make the market infrastructure more mature. Uh eventually a market is a is an information system. It allows all the market participants to express their views around like uh how things are going to evolve. Um and the more mature market is the more nuance are the views that market participants can provide. If you think of crypto markets like 5 10 years ago, basically they were a spot only for a few assets.

Uh so the only opinion that a per market participant could express was basically I'm out of the market or I'm up only. No. Uh obviously if to the market you um um also provide derivatives like perpetual futures. If you provide market participants the ability to borrow and lend an asset. If you provide market participants the ability to use an asset as collateral.

If you provide them the ability to use not only crypto and stable coins but also fiat and stocks and other financial instruments uh as an as a as an asset to be traded, you have a much more m a much more mature market. basically a a market where you can uh express your opinions around spot prices, around future prices, around how funding rates are going to evolve, around how interest rates are going to evolve, around how like exchange rates between different assets and asset classes are going to evolve um and and so on. No. And and that's basically what we are uh working on. Uh we think and and that's part of our our long-term vision that um a financial instrument that is on chain is better than a financial instrument that is living on the systems of the traditional financial system.

Like a a stock that you can trade 24/7 that is transferable 24/7 that can be used as collateral anywhere in the world in any venue 24/7 is a better stock than one listed on a traditional market. right now and all the work that we are doing to both leverage the technology of uh blockchains and um regulate ourselves be compliant have own ramps have the ability to listed least registered uh sec approved SEC approved um uh assets as as stocks is part of of that strategy now so yesterday yeah we we announced that we are uh about to uh list uh issuerled uh stocks So real stocks with the same uh identifier than the ones that I have in New York exchange, NASDAQ that have all the benefits of tokenization and blockchain technology, which is basically the ability to transfer them anytime, trade them anytime, use them as collateral uh anytime.

Fantastic. Well, I guess there we have it. A short 20-minute panel, but you know, a lot of insights about UA European collaboration. Founders chase those partnerships. You know investors back these ecosystems.

Thank you Mikuel Basil. Pleasure. Thank you all for listening. Give it up to our panelists.

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