During DIFC’s first Blockchain Week, we brought the blockchain community together. We did this to help the community shape and move thinking forward in an area of technology we believe is set to be fundamental to our digital future.
One of the week’s highlights was the breakfast roundtable hosted by the DIFC for leading figures in the blockchain space in the region, including CEOs from financial institutions, large corporations, start-ups and SMEs. The session provided a private forum to share insights and opinions about the future of investment innovations such as non-fungible tokens (NFTs), cryptocurrencies and digital assets.
Discussing the advantages of blockchain adoption, delegates candidly agreed that while the technology’s applicability across sectors is a foregone conclusion, it is up to the community to come together to shape uses and governance.
It was encouraging to hear everyone agree that the scale and pace of evolution is dependent on how the ecosystem develops, incubates and collaborates over time. Ultimately, each one of us must fulfil a responsibility to make the ecosystem work.
Participants noted that while digital assets are driving new fundamentals in the financial services sector, there is still need for significant education and awareness to achieve mainstream adoption and drive sustainable revenue streams.
This is particularly pertinent for new instruments such as NFTs for digital collectibles. They have recently boomed in popularity as enthusiasts spend huge sums of money on artwork and other online-only objects like trading cards, images or video clips, with some even selling for tens of millions of dollars.
Early adopters called space for a dialogue on NFTs a lonely place due to a limited understanding of the value of digital art. This indicates an opportunity to facilitate strategic communities for artists, collectors and potential investors that preserve this technology beyond the hype phase.
To extend the art metaphor, it was said that much like Picasso’s cubist period, blockchain adoption should be looked at less like a first-mover venture and more like a technology movement by a community.
Some attendees said that such an approach is in the same vein as the fundamental evolution of money on the horizon. This echoes our own view that cryptocurrencies and digital assets will play an important role in next generation finance, and that DIFC and Dubai can spearhead its growth.
At the moment, we are probably standing just a few steps before the starting line of this movement as new ecosystems begin to form to develop innovative blockchain-based business models and disrupt traditional ones. I see the DIFC playing a leading role as we drive the future of finance and innovation for the region.
Those who have been early adopters of blockchain and have chosen DIFC as home to develop their businesses are already seeing awareness and adoption gathering momentum at a rapid pace within our own innovation ecosystem.
We already have more than 450 FinTech and innovation companies operating out of the DIFC, with over 140 new start-ups and FinTechs joining the DIFC Innovation Hub during the first half of 2021. Over 60 per cent of the GCC’s FinTech and innovation companies are based in DIFC and a number of these are focused on blockchain. We are particularly seeing interest around what I call the 3Cs: cybercrime, customer experience and compliance.
DIFC’s innovation ecosystem provides access to a global network of banks, financial centres, regulators and companies that are disrupting the financial and technology sectors while embracing the highest legal, regulatory and operating standards.
Additionally, as attendees noted, DIFC plays a key role in facilitating partnership opportunities between the public and private sector along with agile and adaptive policy making that cuts through the tension between regulation and innovation.
In 2020, one in four investment deals was made in the FinTech sector, pulling nearly 30 per cent of all the funding raised during the year, which was $2.1 billion in 220 deals, according to a report by consultancy firm RedSeer.
This year, start-ups data platform, Magnitt, reported that fintech venture investments in MENA reached a three-year high in Q1 2021, rising 163 per cent year-on-year and 70 per cent from Q4 2020.
Looking ahead, given the significant potential for innovation-related growth, we are planning to quadruple the size of the DIFC Innovation Hub to 315,000 sq ft. The longer term opportunity we foresee is the impact of innovations pioneered by the finance industry crossing over into other industries and driving the future economy.
While there may be certain barriers when it comes to collaboration, we believe our collective success lies in two-way dialogue and engagement. This is why we will continue to examine the challenges and opportunities of new technologies together with our ecosystem partners in order to drive the future of finance from DIFC.