The Dubai Financial Services Authority (DFSA) has urged global regulators to share ideas on clamping down the activities of bad actors in the digital currency industry.
The financial watchdog noted that increased collaboration amongst agencies in different jurisdictions is necessary to protect investors from associated risks, Bloomberg reported. Elisabeth Wallace, director at the agency, confirmed the increase of “bad actors” taking advantage of the regulatory arbitrage in the sector.
“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,” Wallace said.
Dubai’s main financial regulator raised concerns over the growing number of firms offering a wide range of digital asset services under “one umbrella,” a tactic designed to evade regulatory scrutiny. The authority disclosed plans to update its existing rules for digital tokens to address growing anti-money laundering (AML) concerns.
The DFSA is not the only one seeking a global collaboration to police digital assets, with G20 and G7 nations lending their voice. Led by India, the G20 nations are marching toward a legal framework for digital currencies that could see the industry regulated in the same manner as banking institutions.
“We are talking to all nations if we can make some standard operating procedure which everyone follows to make a regulatory framework, and if it can be effective,” India’s Finance Minister Nirmala Sitharaman said.
Dubai’s approach to regulating digital currencies
While other jurisdictions are stiffening their stance towards digital assets, Dubai has opened the doors for global firms to set up operations in the regions following a robust legal framework. Several exchanges, including Binance, Bybit, and Crypto.com, have obtained approval to operate in the region, attracted by the prospects of lower taxation and regulatory clarity.
Despite the positive stance, the government states that all applications are carefully scrutinized to weed out bad actors to protect investors. Dubai’s digital currency regulation also provides stiff penalties, including fines and terms of imprisonment for violation of its rules.
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