As the crypto industry continues to gain mainstream acceptance and adoption, regulators worldwide are grappling with how to address the unique challenges posed by this rapidly evolving sector. While some jurisdictions have embraced cryptocurrencies and blockchain technology to promote innovation and economic growth, others remain skeptical and have taken a more cautious approach to regulation.
Against this backdrop, according to a Bloomberg report, the Dubai Financial Services Authority (DFSA) has voiced its concerns about the global regulatory gaps in the market.
The DFSA has warned that bad actors are “exploiting” these regulatory blind spots across the world and has called for greater coordination among regulators to prevent these activities, according to a recent Bloomberg report.
Global Regulatory “Gaps” Under Fire
According to Elisabeth Wallace, an associate director at the DFSA, bad actors are exploiting these gaps to carry out illicit activities across the world.
Wallace commented at a virtual conference, revealing that the DFSA plans to update its rules on crypto tokens later this year. The rules, which have been in force since November, apply to the city’s business hub and aim to regulate the use of cryptocurrencies and blockchain technology in the region.
Dubai has made significant strides in regulating the nascent financial industry over the past few years. In 2019, the Dubai Multi Commodities Centre (DMCC) launched a digital asset trading platform, the DMCC Crypto Centre, which aims to provide a secure and regulated environment for trading in digital assets. The Dubai Multi Commodities Centre Authority regulates the platform, which oversees the licensing and regulation of companies operating within the DMCC Free Zone.
The Dubai Financial Services Authority has also regulated the city’s business hub industry. In November 2020, the DFSA introduced a regulatory framework for issuing and trading crypto assets. The framework requires companies to obtain a license from the DFSA and comply with a range of regulatory requirements, including anti-money laundering (AML) and counter-terrorist financing (CTF) measures.
The DFSA’s approach to the industry is focused on promoting innovation while ensuring investors’ protection and the financial system’s integrity. The regulator has stated that it is committed to creating a regulatory environment that encourages the development of the crypto industry while minimizing the risks posed by bad actors.
From Oil To Crypto
Dubai is emerging as a growing hub for the crypto industry, with several initiatives to promote the adoption and development of cryptocurrencies and blockchain technology. The city has significantly invested in developing its fintech ecosystem, focusing on the crypto industry.
Dubai’s government has supported the nascent financial industry with several initiatives to attract crypto-related investment to the city. In addition to the DMCC Crypto Centre, which provides a regulated environment for trading in digital assets, the Dubai government has also launched the Dubai Blockchain Strategy, which aims to position the city as a global leader in developing blockchain technology.
The Dubai International Financial Centre (DIFC), a financial-free zone in the city, has also promoted the adoption and development of cryptocurrencies and blockchain technology. The DIFC has launched several initiatives to support fintech and blockchain companies, including the DIFC Fintech Hive, a co-working space for fintech startups, and the DIFC Academy, which offers training and education programs in fintech and blockchain.
Featured image from Unsplash, chart from TradingView.com