Crypto firms are rushing to set up shop in Dubai after it started to offer virtual asset licences, making the Gulf state the latest jurisdiction to seek to become a haven for the global crypto industry.

Exchange ByBit, which last week said it would relocate its global headquarters from Singapore to Dubai, joins major industry players Crypto.com, FTX and Binance in establishing a foothold in the city.

Enthusiasm for Dubai among crypto companies comes as their hopes for Singapore as a digital asset hub have faded. While Singapore has approved just a handful of crypto groups that applied for licences, Dubai has attracted several industry heavyweights in the few weeks since launching its licensing scheme.

Singapore had been viewed as a budding crypto hub in Asia, after China cracked down on digital assets last year. Now, the crypto caravan has moved on as some companies turn their sights to a more receptive regulatory regime in the Gulf.

Changpeng Zhao, chief executive of Binance, who has moved from Singapore to Dubai, said the Gulf state’s government has attracted crypto companies with its “open mindset and a business friendly attitude”.

Binance, the world’s largest crypto exchange by trading volume, consulted on the rules under which it will now be regulated in Dubai. In December, Binance signed an agreement with Dubai World Trade Centre, a tax-free business park, to advise on the regulatory landscape of cryptocurrencies in the emirate. The Virtual Asset Regulatory Authority, which was launched earlier this month, has issued Binance a licence.

Zhao said Binance had lobbied for the formation of a bespoke regulator, describing the decision as “very excellent”, and praising Dubai authorities as “the smartest regulators and government officials any place in the world”.

However, Dubai’s enthusiastic adoption of virtual assets has raised alarm in some financial circles, given the recent decision of the Financial Action Task Force, a global money laundering watchdog, to place the United Arab Emirates on its so-called “grey list” of enhanced monitoring of procedures for preventing the flow of dirty money.

UK and US lawyers and former regulators said a licence from the emirate will probably do little to convince western regulators that crypto exchanges are under proper supervision.

The UK has also lodged a push to become a “global hub” for crypto, after City minister John Glen declared in a speech on Monday that the country wants to be attractive to “firms that don’t yet have a settled base”. However, lawyers note the government will need to induce British regulators including the FCA to be more receptive to crypto operators.

Dubai’s crypto charm offensive has quickly attracted several companies. FTX Europe, the Swiss-based arm of the exchange, in March said it would establish regional headquarters in Dubai after being granted a licence there. Singapore-headquartered Crypto.com added a Middle East office in the city last week. BitOasis, a Dubai-based crypto exchange also received a provisional licence last week.

Binance has chosen Dubai, where it already has about 200 staff across three offices, to be its regional headquarters, Zhao said. In comparison, he said: “The Singapore government takes a slightly more cautious approach.”

Binance’s Singapore unit in December dropped its application for a licence to run a crypto business in the country after regulators ordered Binance Singapore to stop all crypto transfers with the global exchange binance.com, which the regulator placed on an investor alert list and said “may be in breach” of local law.

Overall, the Monetary Authority of Singapore (MAS), has granted just four crypto licences, after receiving 176 applications for oversight. More than a hundred companies have been turned away, while about several dozen are still hoping for the green light.

“The very low success rate at MAS is discouraging the crypto sector in Singapore,” said Chia-Ling Koh, director at law firm Osborne Clarke, who compiled the figures.

The MAS also earlier this year instituted a sweeping ban on advertising for cryptocurrency, which has been interpreted as a “strong discouragement by MAS for offering crypto to consumers,” according to Nizam Ismail, chief executive of crypto consultancy Ethikom. “That seemed a little harsh. It was announced and implemented overnight.”

In a move ministers said would protect Singapore from “reputational risks”, lawmakers also tightened controls this week by passing new rules that will prevent crypto companies in the city-state from doing overseas business without a licence.

Xue Kai Pang, chief executive of Tokocrypto, a crypto exchange in nearby Indonesia said: “Singapore is definitely losing some of its shine and attractiveness . . . There are more open countries like Dubai.”