Dubai deploys oil wealth and Islamic finance to challenge Asian crypto dominance, but Hong Kong’s liquidity firepower and Beijing backing maintain supremacy.
Opinion
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 to assert global influence via its newfound , 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 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 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 environment, all of which result in massive advantages in institutional capital. Hong Kong maintained this prestigious position with a wide margin over competitors like Dubai, which ranked 11th, and Singapore, which ranked fourth.
Beyond rankings, Hong Kong is further backed by China’s crypto grand strategy, having transformed the city into a dynamic price-setting lever with geopolitical influence where even the Trump family had to travel to Hong Kong earlier this year to pay homage to China’s crypto greatness.
Unlike the United States, which still maintains a “hold-only” crypto-reserve stance, or the Philippines’ proposal to () for 20 years, which is akin to bulk buying stockpiles of Nokia phones because of a belief that mobile calls are here to stay, Beijing seeks to leverage Hong Kong to stabilize markets and respond swiftly depending on the geopolitical pressures it may face via liquidity controls. All of this enables Hong Kong to outperform Dubai and Singapore in both scale and strategic influence.
Asia’s crypto power dynamics
Dubai’s grand strategy is, without a doubt, an impressive blueprint that combines sovereign and oil wealth, Islamic finance and innovative tax advantages. It has made remarkable strides in blockchain experimentation with real estate tokenization, signalling a clear intent to join the ranks of Asian crypto leadership. The gulf in financial infrastructure, liquidity and institutional trust, however, remains vast.
Meanwhile, Singapore’s mature regulatory environment nevertheless faces the lack of liquidity firepower that both Dubai and Hong Kong can bring to bear.
Hong Kong’s combination of first-rate financial infrastructure, strategic liquidity and privileged access to Beijing’s crypto reserves, the combination of which has resulted in Eric Trump’s endorsement of Hong Kong as a “hell of a power” during his pilgrimage to the city, cements its crown atop the Asian crypto throne.
For Dubai, the solvable challenge is clear: convert nascent advantages into scalable, cross-border liquidity solutions while fortifying its home-field advantage within the Islamic digital finance space. Until such an advantage is realized, the Asian crown remains with Hong Kong and China.
Opinion by: Joshua Chu, co-chair of the Hong Kong Web3 Association.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
