(Bloomberg) -- Kraken, one of the world’s biggest cryptocurrency exchanges, received a license to operate its virtual asset trading platform in Abu Dhabi and has set up its regional headquarters in the United Arab Emirates capital. 

The firm is expected to start operations during the second or third quarter, according to Dhaher bin Dhaher, Chief Executive Officer of Abu Dhabi Global Market’s Registration Authority. Kraken, which has more than 8 million users globally, will allow clients to invest, trade, withdraw and deposit virtual assets directly in dirhams.

With countries around the world taking a tough stance on crypto regulation, virtual asset service providers are looking to expand their presence in the UAE due to its “progressive” approach, Dhaher said in an interview. 

Oil-rich UAE has ramped up efforts to attract the world’s largest crypto firms. Abu Dhabi’s ADGM adopted a virtual asset regulatory framework in 2018, while Dubai passed a law to regulate virtual assets last month.

Read More: UAE Readies National Crypto Licensing in Push to Embrace Fintech

Binance Holdings Ltd., the world’s largest cryptocurrency exchange by trading volume, has in-principle approval from ADGM to operate as a broker-dealer in virtual assets. That came a month after the firm got a license to operate in Dubai.

FTX, one of Binance’s top competitors, received a virtual asset service provider license in Dubai last month and said it plans to set up a regional headquarters in the city. BitOasis, the first VASP to be recognized in the country, also secured provisional approval from the regulatory body, while Bybit and Crypto.com are also expanding their presence.

The UAE is the Middle East’s third-largest crypto market, trailing Turkey and Lebanon, with a transaction volume of about $26 billion, according to data compiled by Chainalysis from July 2020 to June 2021.

Changpeng Zhao, Binance’s co-founder and chief executive officer, told Bloomberg last month that Dubai will be his base for the “foreseeable future” and that by “any common interpretation” it’s the company’s headquarters. Quite a few of the firm’s employees will follow his lead in relocating to the skyscraper-studded city in the months ahead, he said.

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