Dubai: When it comes to regulating cryptocurrencies and virtual assets, UAE regulators need to have ‘unambiguous’ legislation and rely on the expertise of industry players, said PwC Middle East in a report on Tuesday. The consultancy emphasized the need for a ‘clear’ regulatory framework backed by law enforcement. PwC said the rules should cover anti-money laundering (AML), counter financing of terrorists (CFT), and other financial crimes.
“Niche regulation on areas like DeFi (decentralized finance) and NFTs (non-fungible tokens) is also essential given the luxury real estate and arts market in the UAE, as this will not only help eliminate ML and TF risks but also help to expand the market,” said the report.
UAE’s share in the global crypto market is around $25 billion transactions, and it has increased 500 per cent between July 2020 and June 2021. Regionally, the UAE ranks third by volume, behind Turkey which had $132 billion in transaction volumes, and close to Lebanon at $26 billion. Going forward, regulators will need to rely more on industry experts to formulate policies.
“By collaborating with industry experts, fintechs, crypto firms, academics, consumer interest bodies, and subject matter experts, regulators can reduce their monitoring and enforcement costs and encourage greater cooperation and compliance to mutually agreed and set standards,” said PwC. “Self-regulation, is proposed as a complement to legislation, and not as a replacement, and requires the involvement and support of legislators for success.”
The accounting firm said UAE will need to push for greater ‘international harmonisation’ and cooperation with other jurisdictions to succeed. “As brought out earlier, with reference to the IMF report calling for greater international coordination, the Sunrise issue and borderless nature of crypto can not only cause friction and misalignment but also make compliance difficult for firms, especially where extra-territorial treaties exist,” said PwC.
