PwC crypto head creates digital asset fund in Dubai

by Arthur · August 3, 2022

PwC’s global crypto leader has left his role at the company to set up a digital asset fund in Dubai, highlighting how the city is attracting crypto business as other putative hubs, including Singapore and Seoul, scrutinize the sector.

Henri Arslanian told the Financial Times that Dubai’s “crypto-openness” influenced his decision to set up his digital asset fund Nine Blocks Capital Management in the city, where it has been granted preliminary regulatory approval.

The Digital Assets Fund, which will receive $75 million from its lead backer and major shareholder Nine Masts Capital, a Hong Kong-based hedge fund, has also positioned three portfolio managers in the Cayman Islands.

The fund’s presence in Dubai comes as the city pushes to establish itself as a crypto hub after Asian financial centers such as Singapore and Hong Kong appeared to be turning cold on the sector in the wake of a steep market rout and wave of corporate collapses.

“Hong Kong would be a natural home for us”, Arslanian said, adding that Nine Blocks had also considered Singapore.

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“But when we looked at the broader ecosystem . . . Cayman and Dubai made a natural choice,” he said, citing factors that included regulatory approval times and the ability to travel easily. Hong Kong still has a mandatory hotel quarantine for most international travelers.

Arslanian, who will retain a senior adviser position at PwC, said he had already moved to Dubai. He added that the fund may later add a base in Asia, but Dubai’s travel connections and time zone just four hours behind Singapore made it easy to cover the region.

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Dubai’s crypto push comes in the wake of rival regional hubs Singapore, Hong Kong and Seoul putting the nascent industry under increased scrutiny.

Sopnendu Mohanty, the Monetary Authority of Singapore’s Chief Fintech Officer, said in June that the city-state would be “brutal and relentlessly tough” on crypto misbehavior.

Just days later, Singapore’s watchdog reprimanded Three Arrows Capital, a once-prominent crypto hedge fund that collapsed after a credit crunch hit the digital asset market.

Dubai has opened its doors to some of crypto’s biggest participants. Last year, exchange Binance announced a Virtual Asset License from regulators in Dubai, while rival exchange FTX announced last week that it had been approved to operate in the jurisdiction.

Arslanian said the city’s “tier one” regulatory and licensing regime made it attractive to funds like his, which hope to attract institutional investors.

In the past two months, Komainu, a crypto group backed by Japanese investment bank Nomura, received preliminary approval from the city’s digital assets regulator, while crypto exchange CoinMENA was granted a preliminary license.

“I think so [Dubai] is currently the most appealing destination for many large crypto firms,” said Carlton Lai, head of blockchain and cryptocurrency research at Daiwa Capital Markets, adding that the city had moved “very quickly” to hand out licenses.

“Compare this to the likes of Singapore and Hong Kong, things have not only been very slow, but there have been many regulatory flip-flops that simply reduce confidence in its regulatory direction,” he added.