Dubai considers new crypto law update

Jun 05, 2023

In a recent revelation, Elisabeth Wallace, the deputy director of the Dubai Financial Services Authority (DFSA), has declared the agency's intention to revise its cryptocurrency regulations, which have been operational since November of the previous year in Dubai's commercial hub. Wallace hinted during a discussion with Bloomberg that the newly revised rules are likely to be released later in the current year. This announcement signals a proactive regulatory approach towards the dynamic and fast-paced evolution of the digital currency landscape.

Speaking at a virtual conference held on Friday, Wallace pointed out some potential issues within the current regulatory structure. She expressed concern over the tendency of numerous cryptocurrency businesses to conduct a broad range of activities under a single entity. This wide-spanning operation, according to Wallace, raises regulatory and oversight concerns, making it critical for global watchdogs to communicate and collaborate more closely to ensure a comprehensive regulatory framework.

“Many crypto businesses tend to operate a significant number of activities within one umbrella and that really concerns us. They are across the whole world and as regulators, we need to talk to each other a lot more in this area because there can be quite a few gaps and we have seen a lot of bad actors trying to plug some of those gaps,” she elaborated during the conference. This statement draws attention to the complex challenge regulators face as they navigate the global reach of crypto businesses.

Furthermore, Wallace's comments underscore the issue of 'regulatory arbitrage', where crypto businesses might exploit gaps between different jurisdictions' regulatory frameworks. This could pose risks to financial stability and market integrity, as unscrupulous entities might leverage these gaps to undertake illicit activities. Her suggestion for enhanced communication between regulators is an important one, considering the global and borderless nature of cryptocurrency transactions.

Overall, the planned update of Dubai's crypto rules shows an active commitment to addressing these challenges and maintaining a robust, well-regulated financial ecosystem. The move illustrates Dubai's keenness to remain at the forefront of the evolving digital finance world, positioning itself as a progressive and adaptable hub for fintech innovation. As the regulatory landscape continues to shift in response to the crypto industry's growth, it will be crucial to see how Dubai, and indeed the world, strikes a balance between promoting innovation and preserving financial security.

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