The UAE has started implementing crypto regulation in the past year, issuing more than 30 exchange licenses and establishing a devoted regulatory body. With official oversight, the country’s market share should jump well above $26 billion last year to know more visit: bitprime-gold.com. But will UAE’s new regulatory structure make the market grow even faster? And will the Emirati government be able to regulate cryptocurrency quickly and effectively?
The UAE has recently launched the UAE Blockchain Strategy 2021, which aims to use blockchain technology in 50% of its government transactions by 2021. Its recent regulatory announcements are a positive step in this direction, but further development is necessary to ensure that the UAE is a global leader in cryptocurrency regulation. Read on to discover some of the most important lessons the UAE can learn from other countries in cryptocurrency regulation.
The UAE is a hub for crypto firms and has been under international scrutiny for not cracking down on illicit money flows. Its regulator is working to protect the financial system from crypto scams, but the government has not ruled out outright banning them. The official also stressed that the UAE considers the latest FATF guidance and other countries’ regulatory strategies in drafting its cryptocurrency regulation framework.
The government’s focus on blockchain is evident in the UAE, with various initiatives and ventures related to the technology. However, the UAE has primarily avoided cryptocurrency regulation until recently. Although the DIFC has recently conducted a public consultation on the proposed legal framework for security tokens, the UAE government has clarified that it intends to regulate other forms of crypto assets as well. The DIFC’s regulatory framework for crypto assets, such as Defi, will likely have to be amended to include the industry.
The regulatory process for digital assets should be designed to address the challenges of their unique functions and uses and minimize their associated risks. While this technology is still in its infancy, many potential risks are associated with it. These include risks related to crime, illicit finance, national security, and human rights. In addition, they may pose additional economic and financial risks, so their regulation should be tailored to these new technologies.
The SEC, which is the government’s primary authority on financial markets, must enforce regulations on digital assets and the market infrastructure that surrounds them. That includes tax reporting. If a crypto trade company does not correctly report its profits and losses, the SEC can use the information to investigate and prosecute the company. This would begin with the 2024 tax season. These are just some steps that need to be taken to ensure that cryptocurrency trading remains safe and legal.
The growing popularity of cryptos and increasing public acceptance of them further compound the regulatory challenges. According to a recent survey by the Washington-based nonpartisan think tank Pew Research, 16% of U.S. respondents have traded, invested in, or used crypto. And according to a survey by crypto firm New York Digital Investment Group in January 2022, the total number of Americans who had invested, used, or traded cryptocurrencies was 46 million. That’s about 14% of the population.
Despite this, the UAE is facing international scrutiny over its approach to cryptocurrency regulation, mainly because it has not cracked down on dirty money flows and is still awash with crypto companies. This is putting the country under the spotlight as the region becomes known as a haven for Russian fortunes. The government is keen to keep the country free from sanctions, which may deter investors from setting up shop in the UAE.
The UAE has seen other countries adopt cryptocurrency regulations, such as the ADGM. Its financial regulator, the Securities and Commodities Authority, has yet to issue a formal regulation governing cryptocurrency and ICOs. However, it has stressed that cryptocurrency trading is high risk and that investors invest their funds at their own risk. For lowering the risk in cryptocurrency trading investors can use bitcoin trading software. The UAE should follow other countries’ examples of cryptocurrency regulation. The UAE’s government should be careful not to make the mistakes other countries have made.
Alice is a professional writer and editor at Research Snipers, she has a keen interest in technology and gadgets, She works as a junior news editor at Research Snipers.