PwC crypto head sets up digital asset fund in Dubai

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

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

The digital assets fund, which will receive $75mn from its chief backer and main 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 presses forward with establishing itself as a crypto hub after Asian financial centres such as Singapore and Hong Kong have appeared to turn cold on the sector in the wake of a steep market rout and wave of corporate collapses.

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

“However, 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 travellers.

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

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 the city state would be “brutal and unrelentingly hard” on bad crypto behaviour.

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

Dubai has been opening 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 just last week it was 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 provisional approval from the city’s digital assets regulator, while crypto exchange CoinMENA was granted a provisional licence.

“I think it [Dubai] is currently the most appealing destination for many major 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 licences.

“Compare this with the likes of Singapore and Hong Kong, things have not only moved very slowly, but there has been numerous regulatory flip-flops that simply reduces the confidence in its regulatory direction,” he added.