As the crypto industry continues to gain mainstream acceptance and adoption, regulators around the world are grappling with how to address the unique challenges posed by this rapidly evolving sector. While some jurisdictions have embraced cryptocurrency and blockchain technology to fuel innovation and economic growth, others remain skeptical and take a more cautious approach to regulation.
Against this background, according to Bloomberg a reportThe Dubai Financial Services Authority (DFSA) has expressed concerns about global regulatory gaps in the market.
The Dubai Financial Services Authority has warned that bad actors are “exploiting” these regulatory blind spots around the world and called for more coordination among regulators to prevent such activities, according to a recent Bloomberg report.
Global regulatory “loops” under fire
According to Elizabeth Wallace, Associate Director at the Dubai Financial Services Authority, bad actors are exploiting these loopholes to carry out illegal activities around the world.
Wallace commented at a virtual conference, revealing that the DFSA plans to update its rules on tokens later this year. The rules, which have been in effect since November, apply to the city’s business center and aim to regulate the use of cryptocurrency and blockchain technology in the area.
Dubai has made great strides in regulating the nascent financial industry over the past few years. In 2019, the Dubai Multi Commodities Center (DMCC) launched its digital asset trading platform, DMCC Crypto Hub, which aims to provide a safe and regulated environment for trading in digital assets. The DMCC Authority regulates the platform, which oversees the licensing and regulation of companies operating in the DMCC Free Zone.
The DFSA has also regulated the city’s business center industry. In November 2020, the Dubai Financial Services Authority introduced a regulatory framework for the issuance and trading of crypto assets. The framework requires firms to obtain a license from the Dubai Financial Services Authority and comply with a range of regulatory requirements, including anti-money laundering (AML) and counter-terrorism financing (CTF) measures.
The DFSA’s approach to the industry focuses on promoting innovation while ensuring investor protection and the integrity of the financial system. The regulator has stated that it is committed to creating a regulatory environment that encourages the development of the cryptocurrency industry while minimizing the risks posed by bad actors.
From oil to cryptocurrency
Dubai 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 invested heavily in developing its fintech ecosystem, with a focus on the cryptocurrency industry.
The Dubai government has supported the nascent financial industry with several initiatives to attract crypto-related investment to the city. In addition to the DMCC Crypto Hub, 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 the development of blockchain technology.
The Dubai International Financial Center (DIFC), a financial free zone in the city, has also encouraged the adoption and development of cryptocurrency and blockchain technology. The DIFC has launched several initiatives to support fintech and blockchain companies, including 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