Hormuz: Dubai shows its resilience as a crypto hub – and its vulnerabilities

Amid conflict, the emirate has proved its hard-earned resilience as a global crypto hub. But intensifying competition, lingering geopolitical risks, and a growing trend of multi-base crypto operations expose a longer-term challenge. 

As missiles and drones shattered Dubai’s calm in the weeks after U.S.-Israeli strikes on Iran in late February, Jonny Dodge’s phone started ringing off the hook.

As chief executive of YourSky, a private aviation firm whose client list runs heavily through the crypto industry, Dodge had a more up-close view than most into how Dubai's wealthiest residents respond to risk.

"It was not subtle," Dodge said. As commercial air travel seized up, many of Dubai’s wealthy expat class wanted out – as fast as possible and at pretty much any price.

"The concern was fundamentally about uncertainty," Dodge said. "For many of these individuals, if there was even a very small perceived risk, they preferred to be elsewhere."

Some paid tens of thousands of dollars for private evacuation flights to the Maldives, Sri Lanka, or Europe. Within days, organisers cancelled TOKEN2049, one of the world's most-anticipated crypto conferences. The panicky exodus raised an immediate question: had one of crypto's global capitals been built on sand?

The United Arab Emirates city spent years successfully positioning itself as crypto’s frictionless middle ground: a low-tax, regulation-friendly hub where founders build, trade, and raise capital while remaining within striking distance of Asia, Europe, and Africa. In a sector shaped by regulatory crackdowns and uncertainty, the city also offered something increasingly rare: predictability.

Then, almost as quickly as the panic began, Dubai’s calm returned. Crypto industry insiders say a surprisingly large number of people stayed, while many of those who fled have already returned or plan to. They report crypto business as usual or even stronger than before,  even as the conflict drags on.

But the bounce-back doesn’t tell the whole story. The conflict has exposed a deeper reality about Dubai’s crypto economy: many of the people powering it were never fully anchored there. The same openness that attracts globally mobile founders to Dubai also makes it easy for them to leave when regional tensions rise.

A growing trend toward "multi-base" operations among crypto founders, combined with rising competition from other hubs like Hong Kong, means Dubai’s status as a crypto capital faces greater long-term challenges. A more prolonged or deeper regional conflict could sharpen that challenge and accelerate the shifts underway.

“If disruption to trade routes like the Strait of Hormuz were prolonged, or if conflict escalated into sustained instability, the picture could look very different in six months," said Christopher M. Davidson, a scholar of Middle East politics and a Fellow at Durham University. 

Alex Scott, head of Solana for the Middle East, told The Node the recent disruption revealed both Dubai’s resilience and its fragility. “This is a very unique economy,” he said. “There’s a huge expatriate population, and people are here because this is a place to do business and create value. Because of that model, it’s very fluid and fluid by design.”

The globalised crypto city

Dubai’s rise as a crypto hub gained momentum between 2021 and 2023 after China’s crackdown on digital assets, Singapore’s tightening regulatory stance, and increasing hostility toward crypto firms in Europe and the United States. 

The emirate positioned itself differently. Rather than treating digital assets as a legal grey area, Dubai’s authorities have provided the sector with regulatory certainty. 

The establishment of the Dubai Virtual Assets Regulatory Authority (VARA) in March 2022 was a signal to global firms that the UAE wanted to become one of the world’s dominant digital asset centres. 

According to blockchain analytics firm Chainalysis, the UAE received more than $56 billion in on-chain value during its 2024 - 2025 reporting window, representing 33% year-on-year growth. 

While direct comparisons with hubs like Singapore and Hong Kong are difficult to make from public data, as Chainalysis typically reports regional aggregates, the UAE's figure is notable relative to the $400 billion received by East Asia as a whole during the same period. The composition of Dubai’s flows has also shifted. Crypto activity is moving from trading to real-world applications at a rapid pace.

Jordan Wain, global policy advisor at Chainalysis, told The Node that growth was no longer limited to trading. “Merchant services are surging – small retail merchant transactions up 88%, large retail up 84%, professional up 80%,” Wain said, referring to the latest 12-month reporting period covered in Chainalysis’ 2025 Geography of Cryptocurrency Report. “That’s an early, data-backed signal that crypto in the UAE is moving from speculation toward real commercial utility.”

Irina Heaver, a UAE-based crypto lawyer and founder of NeosLegal, told The Node that interest in operating in Dubai remains robust, despite the ongoing tensions.

"We're not seeing any legal exit from Dubai," she said. "On the contrary, we have never been this inundated with requests from firms looking to establish themselves in the UAE."

According to Heaver, the maturity of Dubai's crypto sector is most visible in the scale of regulated participation.

Dubai’s VARA has issued 71 virtual asset service provider (VASP) licences so far, while 167 VASP licences are currently active across the UAE’s five regulators,  a concentration Heaver described as potentially the largest cluster of regulated virtual asset firms globally.

“Regulatory clarity, everyone talks about that all the time, and that has not changed,” Scott said. “If anything, in Q1 it got better,” referring to a comprehensive new framework issued on February 13, which completely replaced the previous federal crypto regulations.

Rather than a mass exodus, crypto industry executives, lawyers, and analysts describe something more subtle unfolding – a shift toward “multi-base” operations, where founders retain companies, licences and teams in Dubai while increasingly splitting their time across other jurisdictions, including Hong Kong, Singapore, Europe, and India.

Heaver argues that the change underway is structural rather than geographic, representing an evolution in how global crypto companies approach their operational footprint.

“Clients are increasingly using Dubai as one component of a broader international structure,” Heaver said. “Typically (they are) separating licensing, token issuance, treasury, and operations across different jurisdictions for risk management and efficiency.”

In crypto, where remote work has been normal for years, that approach is becoming standard practice rather than an exception, reflecting the industry's borderless nature. 

“Even in the last cycle, it was common to combine multiple jurisdictions, an operating company in one place, a legal entity elsewhere, maybe a foundation structure on top,” said Solana’s Scott.

The idea of a single headquarters dominating a crypto company's operations is steadily fading, giving way to a more distributed model that leverages the advantages of multiple jurisdictions. “No one is pulling out,” Scott added. “The corporate infrastructure stays in place, but especially in crypto, where it’s remote-friendly, people will be picking and choosing, splitting time between places.”

A hybrid model is emerging. Founders maintain multiple operational centres simultaneously: licensing in Dubai, engineering in India, treasury management in Singapore, foundations in the Cayman Islands, and investor relations in London or New York.

"The single-base model is fading fast for any firm operating at scale," Heaver said. The diversification is both strategic and psychological. Crypto entrepreneurs have spent years navigating banking uncertainty, regulatory unpredictability, and jurisdictional risk. Multi-jurisdiction structures provide insurance.

Conferences, networking, and presence

While the long-term corporate infrastructure may remain intact, one area where the disruption has been real is Dubai’s conference economy. Crypto conferences transformed the city into an enormous networking marketplace where venture deals, partnerships, and token launches were negotiated in hotel suites, restaurants, and side events.

“Dubai as a conference hub has obviously taken a step back,” Scott said.

Solana itself cancelled a planned founders event ahead of TOKEN2049.“We were supposed to organise a Solana Superteam founders event the week before Token2049, and we had to reschedule it because fundamentally the international visitor crowd just wasn’t there.” he said. 

That matters because crypto remains an unusually relationship-driven industry despite its digital foundations. “A lot of deals are done during these times because you have side events, dinners, private networking, and a lot of dealmaking happens in those rooms,” Scott said.

Dubai benefited from becoming the default gathering point for the industry after Singapore began tightening licensing requirements and the United States entered a more aggressive enforcement phase.

Now, competitors are trying to regain momentum.“I think it’s less Singapore and more Hong Kong,” Scott said when asked where pressure is emerging.

Hong Kong, Singapore, US push for influence

Hong Kong's renewed push into digital assets is taking shape as a strategy aimed squarely at institutional finance, complete with licensing frameworks for custodians and asset managers rather than the retail trading frenzy that characterized the city's earlier experiments with crypto regulation. 

In 2023, Hong Kong introduced a licensing regime for virtual asset trading platforms, opening the door to regulated retail access after years of caution. More recently, authorities approved spot bitcoin and ether ETFs, positioning Hong Kong as Asia’s most ambitious regulated crypto market. The city has also moved to establish a stablecoin licensing framework, showing a broader push to build institutional-grade digital asset infrastructure.

Singapore has taken a more measured route. Rather than aggressively courting retail crypto activity, the Monetary Authority of Singapore has focused on tokenisation pilots, wholesale payments infrastructure, and regulated experimentation through initiatives such as Project Guardian.

The U.S., meanwhile, is becoming more relevant again as momentum builds around stablecoin legislation, including the GENIUS Act, and as Washington signals broader openness to digital assets. 

“The competitive picture is best understood through regulatory strategy,” Wain said. “Each market is competing on slightly different terrain.”

Still, Dubai retains a unique combination of advantages: speed, accessibility, low tax, and a proactive and welcoming regulatory environment.

“Dubai brings together regulatory clarity, government accessibility, tax efficiency, and speed of doing business in a way few jurisdictions currently match,” Heaver said.

But analysts warn that Dubai’s multi-regulator structure, involving VARA, Abu Dhabi Global Market (ADGM), Dubai International Financial Centre (DIFC), the Capital Market Authority (CMA), and the UAE central bank, may increase complexity as the market matures. “The biggest friction point we see is firms underestimating the complexity of navigating five regulators,” Heaver said.

A crack in Dubai’s polished image

Dubai's crypto economy has always traded as much on perception as on regulatory frameworks. It has carefully constructed an image as a safe, clean, and well-run city where businesspeople and their families can enjoy year-round sun, a luxury lifestyle, and minimal tax. 

Davidson, the Middle East scholar,  argues that Dubai's outward-facing economic structure makes it exposed when that image collides with more uncomfortable realities – such as the conflict-prone region it’s in.

"Dubai's fundamentals are strong, but they depend on a relatively stable regional and global environment," he said.

Yet Davidson points to the emirate's track record of weathering existential threats, noting that the current crisis pales in comparison to what Dubai endured during the 2009 credit crisis.

"Dubai's model has already been severely tested, particularly during the 2009 credit crisis,” he said. “What followed was a more regulated, more robust economy built on stronger investor trust."

The city's structural advantages, he argues, haven't disappeared simply because some crypto professionals are spending more time elsewhere. "The infrastructure in Dubai, both physical and regulatory, remains the strongest within a thousand-mile radius," Davidson said. "That hasn't changed overnight."

A test of Dubai’s rise

Despite the volatility, most executives interviewed still believe Dubai will remain one of crypto’s primary global centres. 

Polygon co-founder Sandeep Nailwal said he expects business as usual to return to Dubai as soon as a “definitive agreement” is reached between the US and Iran.

"Everybody I hear is basically counting days to get back to Dubai," he said. "People want to go back home because that's where they are calling home for some time now."

Scott believes the current disruption represents a cyclical setback rather than a structural collapse. “If you look at the history, whether it was the financial crisis or COVID,  these cyclical periods are part of the UAE story,” he said.

But the Iran conflict has revealed something important about the modern crypto ecosystem and Dubai’s place in it: the industry’s builders belong everywhere and nowhere at once. Dubai looks well set to remain one of crypto’s pioneering capitals. Just not the only one.

Suhana Rafiq

1. Token2049 announced on their website the annual event uncertainty in Dubai will be postpone
2. VARA was established in March 2022.
3. Chainalysis UAE data crypto adoption data
4. Chainalysis 2025 Geography of Cryptocurrency Report.