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Clear regulations, industry self-regulation, and international coordination and cooperation will ensure transparency and compliance in the fast-paced UAE cryptocurrency industry, currently valued at $25 billion.
Between July 2020 and June 2021, cryptocurrency transactions increased by 500%. PwC Middle East in a report titled “The UAE Virtual Asset Market.
The report also identifies a three-phase facilitation model that UAE regulators should follow to ensure adequate transparency and compliance.
With the enactment of Dubai’s Virtual Assets Act and the establishment of the Dubai Virtual Assets Regulatory Authority (VARA), the UAE has been providing an encouraging environment for the development of its crypto industry, which was largely unregulated a few years ago, but recently Legislative measures in 2019 demonstrate the government’s commitment to reducing potential financial crime risks in emerging industries.
clear regulations
A key component of this is clear legislation, backed by law enforcement. The UAE needs a comprehensive, all-encompassing framework covering all anti-money laundering (AML)/counter-financing of terrorism (CFT) and financial crime aspects. Given the UAE’s luxury real estate and art markets, niche regulation in areas such as Decentralized Finance (DeFi) and Non-Fungible Tokens (NFT) is also essential, as this will not only help eliminate ML and TF risks, And it helps to expand the market.
Institutional investors seeking clarity and protection through regulations invest in regulated markets. In addition, regulatory certainty makes it easier for small companies to seek financing and banking relationships, while retail investors have more confidence in gaining government approval.
Industry self-discipline
In addition to clear legislation, a self-regulatory approach can be very beneficial, especially in high-tech and fast-moving industries such as crypto, where industry players have more expertise than external regulators.
By partnering with industry experts, fintech firms, crypto companies, academics, consumer interest groups and subject matter experts, regulators can reduce their monitoring and enforcement costs and encourage greater cooperation and adherence to mutually agreed standards. Additional benefits can include advanced training programs and the sharing of insights and research. Self-regulation is proposed as a counterpart to legislation, not as a substitute, and requires the involvement and support of lawmakers to succeed.
International coordination and cooperation
As the IMF points out, calling for greater international coordination, the issue of sunrise and the borderless nature of cryptocurrencies will not only lead to friction and dislocation, but also make it difficult for companies to comply, especially where extraterritorial treaties exist.
The UAE will need greater international coordination, communication and cooperation with other jurisdictions to be successful in the final stages of our proposed model.
fine balance
Commenting on the report, Mahmoud Al Salah, PwC Middle East Financial Crime Compliance Partner, said: “The UAE is one of the fastest growing cryptocurrency markets in the world. Government support and increased consumer demand for virtual assets have led to The growth of the industry.However, the key policy and strategic issue for the UAE is how to invite innovation, technology and wealth creation and own a future of cryptocurrencies and blockchain with strong regulations to control the potential risks associated with financial crime There is a good balance between. This new frontier of technology may bring unknowingly.
“In our proposed ‘Three-Phase Facilitation Model for UAE Regulators’, we believe that regulators can build on clear and comprehensive regulation, collaboration with industry experts, and international collaboration that promotes transparency, compliance and innovation within the industry It has benefited a lot.” – – arab trade news agency
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