The UAE, particularly Dubai and Abu Dhabi, drives this growth. Between July 2020 and June 2021, the UAE’s share in the global crypto market surged by 500 per cent, reaching over $25 billion in transaction value, positioning the UAE as a critical player in the digital asset space.
However, many investors continue to grapple with operational and security challenges as digital assets gain traction as preferred investments.
Research by Hacken reveals that nearly 70 per cent of crypto wallets possess security vulnerabilities, and many investors encounter counterparty risks when outsourcing custody to OTC brokers and exchanges.
Enter Chris Desjardins, the founder of Tungsten, who aims to revolutionise this space. Tungsten, the first UAE-built and regulated custody platform is designed to offer institutional investors a secure way to store their digital assets. The company’s experts utilise cutting-edge online and offline security measures alongside rigorous regulatory compliance to safeguard these assets.
“Annually, institutional investors carry out billions in digital asset transactions in the UAE. However, these investors face several operational and counterparty risks, security gaps, and potential fraud. Tungsten was established to provide peace of mind for institutions investing in digital assets, including cryptocurrency, by bolstering the available technology and procedures,” explained Desjardins.
Regulated custody is essential for institutional investors as blockchain, Web3, and DeFi evolve. Institutions need more robust procedures, higher governance standards, and appropriate regulation to navigate this new frontier effectively.
Institutional entry into the digital asset space is a vital step toward maturity. Yet, some decentralised finance (DeFi) enthusiasts oppose institutions reclaiming control over decentralised financial systems.
However, the safeguards of traditional finance can support transformation and underpin investor confidence. Larger organisations and institutions can also unlock new use cases, such as Bitcoin ETFs, imminent Ethereum ETFs, and the tokenisation of real-world assets like real estate.
Tungsten is incorporated, headquartered, licensed, regulated, financed, and focused on serving institutional investors in the UAE. Its comprehensive UAE-based operations protect clients from various geopolitical risks.
“Firstly, we have secure online and offline procedures, including bank-grade physical vaults, enterprise-grade wallet management, and world-class network hardware. Secondly, we are independent and segregated from other digital asset services (for example, crypto trading), with a pure focus on safeguarding digital assets for our clients. Thirdly, we have solid governance and high insurance coverage to reassure investors,” said Desjardins.
The experienced Tungsten team brings knowledge in digital asset custody and traditional finance, ensuring continuous security enhancements. They regularly upgrade technology and review procedures to comply with regulatory standards and meet the high expectations of their institutional customers.
Quantum computing presents a significant cybersecurity threat to global cryptographic infrastructure, including blockchain cryptography and the financial ecosystem. Its potential to break current algorithms could jeopardise internet-based systems worldwide.
“We are moving into a time when quantum-safe solutions will be imperative for digital asset custody. This is an excellent opportunity for businesses like Tungsten because ensuring safety and security for our clients is at the core of what we do,” added Desjardins.
Criminal organisations are increasingly adept at using artificial intelligence to fake identities. Tungsten robustly defends its institutional clients and funds with secure transaction verification and validation procedures.
“It is a real threat to institutions, but comprehensive cybersecurity and custody can combat it. For example, for each transaction, we do not just validate ‘who’ you are but also check ‘what you know’ (e.g., codes) and ‘what you have’ (e.g., crypto keys). Multi-layered approvals act as a first line of defence,” explained Desjardins.
Tungsten’s immediate focus is the UAE, which has a rapidly growing demand for service. This year, the company plans to expand its customer base among institutional investors, foundations, asset managers, crypto miners, and high-net-worth individuals (HNWIs).
The UAE’s regulatory framework has created a crypto-supportive environment, attracting global businesses due to its clear regulations and collaborative atmosphere. The Middle East is heavily investing in becoming a hub for digital assets and the broader Web3 ecosystem, which has led to the region’s fastest-growing volume of crypto transactions worldwide.
The Dubai Financial Services Authority (DFSA) and the Financial Services Regulatory Authority (FSRA) have both introduced virtual asset-related regulations within the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) respectively, marking a significant step in the UAE’s approach to managing digital finance. The Virtual Assets Regulatory Authority (VARA), established in Dubai in 2022, regulates virtual asset-related financial activities outside of DIFC.
Tungsten’s strategy is to integrate smoothly with the evolving digital asset ecosystem, facilitate off-exchange settlements, and establish connections with diverse service providers. The company aims to collaborate with institutions beyond the UAE to build a global presence and contribute to the ecosystem’s growth alongside regulators and other financial institutions.
“We’re also growing and supporting job creation here in the UAE. In addition, we are continuously innovating our security and technology to ensure our customers’ assets are protected for now and generations to come. Our goal is to help shape the adoption of digital assets in a way that benefits all stakeholders involved,” added Desjardins.
