Dubai Regulator Warns on Crypto Jurisdictional Regulatory Gaps
- Communication among regulators will check bad actors from exploiting regulatory gaps.
- Several crypto businesses hide under one umbrella to operate a number of activities.
There is a need for crypto regulators across the world to talk to each other as it would help to check bad actors from exploiting regulatory gaps, according to Elisabeth Wallace, Associate Director, Policy and Strategy, Dubai Financial Services Authority (DFSA).
There are plans in place by the DFSA to update its rules on crypto tokens and related operations in the region. In line with that, Wallace has urged other regulators to foster bilateral communications. She believes regulators from different jurisdictions could synchronize their rules by talking to each other or find ways to plug the gaps currently exploited by some practitioners in the industry.
Speaking during a virtual conference, Wallace observed that several crypto businesses hide under one umbrella to operate a significant number of activities. According to her, such practitioners are spread across the whole globe and attempt to exploit the gaps left by varying regulatory protocols between jurisdictions.
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.
Regulatory variation across jurisdictions is a common situation in the cryptocurrency industry. Countries have moved at varying paces in creating regulatory frameworks for operating crypto-based businesses. The inconsistency leaves gaps that mischievous operators tend to exploit.
For instance, while jurisdictions like Hong Kong and Dubai incline towards attracting crypto-related investment, Singapore is focused on curbing retail-investor participation in the industry. At the same time, the US regulators seem more interested in clamping down on crypto firms following the collapse of the FTX exchange and the consequent ripple effect.
Wallace believes regulators from different jurisdictions talking among themselves will plug the existing gaps and limit the exploitation risks from insincere operators.