Founder Ola Doudin says region’s best-known exchange plans expansion to Saudi Arabia
Dubai-based cryptocurrency exchange BitOasis plans to intensify its efforts this year to help authorities in the United Arab Emirates (UAE) formulate regulations for trading in digital currencies, the company’s CEO and co-founder Ola Doudin said.
“In 2018, our priority is working closely with regulators to provide regulation for our business and our operations,” Doudin said in a joint phone interview with Zawya and Accelerate SMEs on Tuesday.
“We have achieved good progress in that area and we are working closely alongside local regulators to license our business,” she added.
The amazing rise of Bitcoin, the most valuable cryptocurrency, which grew in value by nearly 2,000 percent last year to a high of over $19,000 on Luxembourg-based exchange Bitsamp in December, has encouraged many investors around the world to trade in the lucrative currency.
But the lack of universal and local rules guiding trading in digital currencies makes their market value volatile and subject to sharp falls. Bitcoin has tumbled in value in recent weeks, and was trading at $11,341.60 on Bitsamp on Thursday morning – an 18 percent fall since the beginning of this year.
Prices have fallen on traders’ fear of a regulatory crackdown after reports suggested that South Korea could ban trading in the digital currencies, Reuters reported.
UAE-based BitOasis is the best-known exchange platform for trading in digital currencies in the Middle East and North Africa region and is set to expand this year to neighbouring countries, Doudin said. She added that the company is licensed as a commercial company.
“The second priority we have in 2018 is expanding across the GCC market. And basically expanding (the platform) to other countries, in Saudi Arabia and across the Middle East as well,” Doudin said.
Growing pains
The founder pointed out that since the company’s launch in 2015 it has graduated from a start-up to a scale-up.
With the volumes and user-base doubling month-on-month since July 2017, new challenges have surfaced that require more investments in technology to expand the portal’s capacity, Doudin said.
The company has faced criticism from its customers in the past couple of months over delays in user verifications and withdrawals.
BitOasis had issued a press statement on Tuesday following publication of a story in a local newspaper last week that deposits and withdrawals to and from the exchange had been disabled from some local banks. The statement explained that Emirates NBD’s recent decision to halt transfers from some customers dealing with blockchain-based trading platforms applies not only to BitOasis but to similar companies both locally and internationally.
BitOasis reassured its customers that it continues to have “excellent relationships with local banking partners”, adding that it currently does not have any issues with accepting or sending customer transfers to UAE or GCC-based banks.
In a statement by an Emirates NBD official spokesperson sent to Accelerate SME on Wednesday, the bank reiterated that it does not prohibit its customers from undertaking transactions involving blockchain-based trading platforms including transactions with BitOasis.
“Emirates NBD does however have policies, systems and controls to detect and prevent financial crime including money laundering, terrorist financing and breaches of international sanctions in line with its regulatory obligations and the expectations of our correspondent banks. It is therefore possible that some transactions associated with Bitcoin may be rejected by Emirates NBD or as a result of rejections by other domestic or international correspondent banks,” the bank’s spokesperson said.
Users’ complaints
Several users of BitOasis have taken to Twitter to express their frustration with the recent delays they experienced using the exchange.
BitOasis has addressed the issue in several postings published on the company’s blog and official Twitter account.
“As adoption of digital assets and blockchain technology is on the rise worldwide, we at BitOasis are seeing an exponential increase in demand for our services in the GCC region.
We welcome this growth, but we also acknowledge that this might create bottlenecks, which our new clients may temporarily experience from time to time,” the company said in the statement issued on Tuesday.
“We would like to assure our longstanding clients and partners that the team at BitOasis is working tirelessly at resolving these issues.”
Doudin said she aims to acquire millions of customers from the region and she aims to do so by launching “more digital assets, more products and services for users and investors in the region”.
“We are dedicating the recent round of financing and funds we have in the company to double the size of our teams across all verticals to make sure we have the right tech infrastructure and architecture to support 100x growth in the next few months,” she added.
More firms funded
The MENA region’s startup ecosystem witnessed a record year in 2017 in terms of the number of deals done, with 260 firms raising $560 million in funding, according to the “State of MENA Funding” report published this week by Magnitt, a website that provides information on MENA’s entrepreneurial ecosystem. However, the actual amount of funds raised was 36 percent lower than the $874 million raised in 2016.
Dubai hosted two conferences this month on the blockchain technology, which is a ledger of online transactions shared among different nodes on a network and the underlying technology on which all cryptocurrencies are based. Blockchain is used in the financial sector as well as in other sectors.
Doudin said BitOasis has raised two rounds of funding, the values of which have not been disclosed, from regional and U.S.-based investors, mostly from venture capital funds such as Wamda Capital and Jabbar Group.
“We closed our (latest) round of financing around Q3, 2017. In Q1 and Q2 of 2018, we are not looking to raise funds because we are dedicating all our resources and energy into investing in our infrastructure,” Doudin said.
“Towards the end of 2018, we will be looking to raise more funds, locally, regionally and internationally, to take the company to the next stage,” she added.
Doudin said that globally, the infrastructures of many cryptocurrency trading platforms have not yet matured enough to handle the growing volume of users.
“Leading international exchanges in the digital space that have raised millions. Even those companies are facing bottlenecks onboarding customers, verifying customers, getting into banking issues, because of the sheer scale of new customers that are getting into the crypto-tokens and buying digital assets,” Doudin said.
The Jordanian entrepreneur said another key challenge besides technology is finding the right talent and growing the tech team. She added that the company built its tech team in Europe, with most of them operating out of the Czech Republic.
Tech experts have previously told Zawya that the blockchain technology lacks enough professionals to carry out operations, not only in Dubai but worldwide.
The promise of technology
Doudin said blockchain technology will transform financial services.
“What really drove us to launch the company is basically the innovation and the promise that technologies like blockchain can provide in transforming the financial services,” she said.
Internationally, many banks, financial institutions and governments have already started to adopt blockchain technology to address financial market requirements.
Dubai plans to integrate the technology across all governmental entities by 2021.
The UAE and Saudi Arabia are working together to issue a digital currency that would be accepted in cross-border transactions between the two countries, Reuters reported last month, quoting the UAE central bank governor Mubarak Rashed al-Mansouri.
Innovation being built on the blockchain is still at a nascent stage but things are moving quickly, said Doudin. “Year on year, we will see a lot more products and innovations being built on the blockchain that (aren’t) specifically around investing or speculation but will have specific consumer-used cases such as e-payments, remittances, access to capital for startups and other funds,” she added.
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