- Regulation is steadily catching up to the world of digital assets this year.
- Places like the UAE have already taken it upon themselves to implement several AML measures.
- The UAE has also taken steps and implemented an Online Security Law that could fine unlicensed cryptocurrency dealers.
Regulation is steadily catching up to the world of digital assets this year. Dubai specifically passed the Dubai Virtual Asset Regulation Law that is aimed at establishing an “independent authority to oversee the development of the best business environment in the world of virtual assets in terms of regulation, licensing and governance.”
With regards to anti-money laundering (AML), the anonymity provided by blockchain is very attractive to malicious parties. Just last year around $8.6 billion was laundered, which is a 30% increase from the previous year.
Places like the UAE have already taken it upon themselves to implement several AML measures that come recommended by the global standard-setting body, the Financial Action Task Force (FATF).
When looking at decentralized finance (DeFi), distributed ledger technologies like blockchain can facilitate decentralized systems through making use of smart contracts, where there is no single central authority with control.
This makes it difficult to ensure all legal requirements are met. However, regulatory steps are being taken globally and the FATF has already issued guidance for AML compliance in DeFi systems. The European Union’s draft Regulation of Markets in Crypto Assets (MiCA), also includes some provisions that relate to DeFi.
Consumer adoption has also grown significantly over the last few years. The biggest concern for most regulators is consumers’ lack of knowledge, which could prevent them from prospering in the digital asset market.
Regulators worldwide are taking this seriously and are making sure that there are clear prohibitions on misleading advertising. The UAE has also taken steps and implemented an Online Security Law that could fine unlicensed cryptocurrency dealers.