In this article, Yousuf Mohamed Al-Jaida, Chief Executive Officer, QFC, highlights Qatar’s strategic focus on digital innovation, particularly in the realm of financial services, and elaborates upon QFC’s pioneering ‘Digital Assets Lab’ initiative that paves the way for the development of a digital assets sector in Qatar, accelerating the nation’s transformation into a centre of excellence for financial services and innovation.

Qatar’s National Vision aspires to transform the nation into an advanced society by 2030, capable of sustaining its own development. It recognises innovation and entrepreneurship as fundamental drivers of a competitive and diverse economy. Whilst Qatar has already made great strides in building a conducive and welcoming business environment, it maintains relentless focus on enhancing competitiveness and attracting investments.

Accelerating this vision is Qatar’s Digital Agenda 2030 that serves as a catalyst for widespread digital transformation of Qatar, setting the nation up on the path to continued economic growth and prosperity. A cutting-edge digital infrastructure and thriving digital innovation form two of the six strategic objectives of this ambitious agenda that necessitate ongoing efforts to fuel the adoption and development of cutting-edge technologies across all sectors.

With Qatar ranking 39th in innovation input on the Global Innovation Index 2023 amongst 132 economies, the commercialisation of digital solutions is also high on the national agenda.

In the financial realm, these priorities have provided the impetus for Qatar Central Bank’s (QCB) Fintech Strategy that encapsulates the nation’s ongoing pursuit to diversify its financial products and services and become a centre of financial innovation. Building the fintech foundation and infrastructure is laid out among the foremost priorities with emphasis on enhancing regulatory framework, collaboration between existing financial ecosystem members, and augmenting Qatar’s attractiveness as a launchpad for local and global fintechs.

To actively contribute to national ambitions and advance Qatar’s fintech journey, the Qatar Financial Centre (QFC) established the Innovation Dome, powered by QCB, in October last year. The strategic platform embraces the values of collaboration, creativity, and excellence to create a robust ecosystem for international fintech leaders and entrepreneurs to engage in and benefit from. In effect, to nurture a culture of innovation and spotlight Qatar’s favourable environment for the advancement of financial technologies.

Breaking new ground in Qatar’s financial landscape, QFC with the support of QCB, Qatar Development Bank, Qatar FinTech Hub, and other organisations, introduced the Digital Assets Lab as the inaugural initiative under its Innovation Dome. Designed to spur open innovation, research and development in digital assets and Distributed Ledger Technology (DLT), the Lab lays the foundation for the development of a digital assets sector in Qatar.

Predominantly, the initiative feeds into the growing global appetite for digital assets and tokenisation and paves the way for international collaborators to contribute to Qatar’s flourishing digital economy. Digital assets are rapidly gaining prominence in the global financial industry as innovative solutions for payments, investments and asset management. Using the process of tokenisation, real-world assets, including tangible assets such as real estate or commodities as well as intangible assets like equities and bonds, are converted into digital form. These tokens are generated, recorded and exchanged leveraging DLT technology which ensures transparency, security, and efficiency in transactions.

The global digital assets market has been on an upward spiral with the asset tokenisation market alone skyrocketing from $1.5 billion in 2018 to $120 billion at present. It is expected to reach an estimated $16 trillion by 2027.

Against this backdrop, QFC envisions the development of this market in Qatar through the Digital Assets Lab that provides a collaborative environment for businesses and researchers to explore, create and validate innovative solutions in the digital assets and DLT technology space. Beginning this month, the Lab will welcome its first cohort of over 20 participants including fintech startups, established financial institutions, technology providers and members of academia.

QFC adopts a rigorous criterion for the selection of participants in the Lab that involves an evaluation of their innovative potential, financial and commercial viability of their digital concept, regulatory compliance, and their ability to support Qatar’s strategic goals whilst contributing towards the development of the country’s digital assets sector.

As a testing ground for emerging technology, business model, products and service, etc the Digital Assets Lab, currently explores various potential use cases, including the Carbon Markets Ecosystem, Private Company Shares Tokenisation, Bond/Sukuk Issuance and Tokenisation, and Real Estate Tokenisation, while also supporting other innovative applications. The central idea is to enhance efficiency, security, and transparency of financial transactions through these specialised technologies, creating room for new business models and financial products.

Participants of the Digital Assets Lab enjoy a number of benefits such as access to Qatar’s business ecosystem, infrastructure and resources to experiment concepts, and operational support with the provision of well-equipped, co-working spaces. They also gain collaboration opportunities with QFC experts as well as its global partners in diverse fields, in addition to receiving insights into Qatar’s regulatory environment for digital assets. Fundamentally, through the Lab the participants can find the relevant support for commercial registration and licensing. To ensure the consistent development of the ecosystem, QFC has collaborated with various banks, fintechs, technology companies and technology infrastructure providers.

In tandem with the activation of the Digital Assets Lab, the QFC Digital Assets Framework 2024 has been issued by the platform. Serving as a comprehensive guide for digital asset businesses within the QFC jurisdiction, the framework sets in place legal and regulatory structures spanning different aspects of digital assets. These include ownership, custody arrangements, transfer, trading, exchange, and smart contracts. The framework forms an essential cornerstone of Qatar’s burgeoning digital assets market by establishing standards for asset tokenisation and advocating for a trusted technology infrastructure that drive value for consumers, service providers and stakeholders. In addition, QFC has also developed various user guides to help current and future participants of the digital assets sector in Qatar.

Public and private partnership will be central to QFC’s mission to contribute to the development of the digital assets sector. To this end, QFC continues to put emphasis on continuous enrichment of the regulations and support for the development of the Lab.

The Digital Assets Lab builds on QFC’s firm commitment to drive economic diversification and cement Qatar’s position as a global leader in financial services. It supports QFC’s long-term goals to foster continuous innovation, attract top global talent, and boost the adoption of financial technologies within the financial industry. To join the Digital Assets Lab or learn more about the initiative, please visit: QFC Digital Assets Lab.