Opinion by: Joshua Chu, co-chair of the Hong Kong Web3 Association
It is no secret that Dubai has been aggressively challenging its Asian counterparts for the crown of becoming the world’s next crypto capital.
Beneath the gleaming air-conditioned skyscrapers, where supermodels are everywhere at crypto events and pilot blockchain programs, a complex grand strategy is unfolding.
Just as Beijing had its strategy to harness confiscated digital assets to assert global influence via its newfound geopolitical currency, complete with on-/off-ramp infrastructure fully set up in Hong Kong, Dubai is also seeking to deploy its own combined arms approach, leveraging sovereign (oil) wealth, Islamic finance foundations and regulatory idiosyncrasies to secure its own corner of the crypto sphere.
Dubai’s approach toward securing its beachhead within the crypto frontier reflects core principles commonly found in grand strategies employed by Middle Eastern nations. They include securing and realizing critical resources, as well as mobilizing unique social and religious identities.
Dubai’s crypto grand strategy
At its very core, Dubai, similar to its modus operandi, seeks to leverage its state-directable oil wealth, which includes its substantial sovereign wealth fund, to hyper-incubate the infrastructure that Web3 companies need and subsidize prospective innovation.
Simultaneously, Dubai is also seeking to leverage its foundation as an Islamic nation to entrench itself within the digital Islamic finance sector, a global market representing nearly a quarter of the globe’s total population.
Dubai is unique in that it not only promotes crypto adoption but also seeks to cultivate a Sharia-compliant digital economy, meeting market demand and establishing a potent identity anchor that few non-Islamic competitors can easily compete against.
Yet perhaps Dubai’s most significant strategic high ground may lie in its tax-free real estate environment. Even Saudi Arabia levies a transaction tax rate of 5% of the transaction value or fair market value, whichever is higher.
This jurisdictionally unique attribute enabled Dubai to become a pioneer of real estate tokenization, with secondary trading made possible as it is free from the burdens and suspicions of real estate transfer taxes. The number of countries with no property tax is fewer than 20.
This unique legal-economic niche gave Dubai a competitive edge in tokenizing an otherwise traditional and illiquid asset class.
Every high ground, however, will be confronted with clear limitations. While Dubai’s tokenized real estate pilot program is indeed significant, it may encounter a significant obstacle, especially considering how Dubai’s financial sector is highly reliant on the expatriate community. For example, an American holding a real estate token might end up getting into trouble because they will have to declare both the virtual asset they hold and the same representing real estate that they also own, regardless of how small a fraction it may be.
This glass ceiling only warns against complacency, as first-mover advantage and oil wealth can only get you so far and are not sufficient to, by themselves, guarantee global dominance.
How Dubai fares against Asian crypto powerhouses
In contrast to global crypto supremacy, both Singapore and Hong Kong remain towering rivals. Both Hong Kong and Singapore boast about having regulatory clarity.
The UAE, by contrast, operates under a relatively fragmented regime, with multiple authorities, including the Virtual Assets Regulatory Authority, which governs virtual asset activities in mainland and free zones, except for the Dubai International Financial Centre and the Abu Dhabi Global Market, which exercise their own regulatory regimes within their territories.
Above all, though Dubai promotes its zero personal income tax regime and a competitive corporate tax regime, entrants nevertheless often find themselves facing high operational costs that offset the tax advantages. Local businesses are required to hire local Emiratis under Emiratization policies, and the annual supervision fees payable to regulators become a recurring burden, comparable to taxation payable regardless of profitability.
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That said, contemporary jurisdictions like Singapore still face their own limitations, notably, limited market size and geographic scale. However, both the UAE and Singapore stand in contrast to Hong Kong’s towering dominance, not merely in regulatory frameworks, but also in unmatched crypto liquidity that can be deployed upon Beijing’s command.
Hong Kong’s strategic edge in the Asian cryptosphere
For the year 2025, in the words of the Hong Kong government, “Hong Kong ranks third globally in Global Financial Centres Index,” trailing only New York and London. This ranking reflects exceptional performance across fintech innovation, financial infrastructure, human capital and business…
cointelegraph.com