The regulatory chief of Abu Dhabi’s international financial center and free zone has called for tighter regulations for cryptocurrency trading and ICOs while recognizing the growing global industry.
Nearly a year after issuing its guidelines for cryptocurrencies and initial coin offerings (ICOs), effectively regulating the industry, the Financial Services Regulatory Authority (FSRA) is sharing its framework with its regulatory counterparts around the world.
“This space needs to be properly regulated, otherwise there is the risk of financial crime,” FSRA chief executive Richard Teng was quoted as saying by The National. “Every time a coin gets stolen or lost, it affects the confidence in this asset class.”
Notably, FSRA chief executive Richard Teng insists that “a lot has changed” over the past few months in a changing landscape that forgoes fears associated to cryptocurrencies to the recognition of a growing industry that requires guidelines to responsibly develop and encourage the sector.
“We are confident that our comprehensive regime – which we have shared with global regulators like the [U.S.] SEC, the UK Treasury, Financial Conduct Authority and Bank of England, and regulators in Singapore, Hong Kong and Japan – can address these risks and bring greater confidence into this asset class.”
The Abu Dhabi regulator’s comments come at a time when lawmakers in the U.K. urged the government to prioritize regulation of the cryptocurrency and ICO space in a Treasury Committee report published today.
One of the first financial centers and trade zones to outline guidance for cryptocurrency firms in October 2017, the Abu Dhabi Global Market (ADGM) enforced the regulatory framework by the FSRA for cryptocurrency firms operating in the zone in June. The regulations, which includes stipulations for exchange operators and crypto custody firms (wallet providers) alike, deems cryptocurrencies as commodities akin to precious metals.
“[W]e do a lot of challenges in regulating something which was designed not to be regulated,” FSRA capital markets director Wai Lum Qwok said of regulating cryptocurrencies like bitcoin last year, whilst insisting the authority is open to the idea in the future.
A member of the R3-led banking-centric blockchain consortium, the ADGM acknowledged the advent of cryptocurrencies as a method of payment earlier this year, despite the likes of Saudi Arabia’s central bank outlawing bitcoin trading in the neighboring country.
The Abu Dhabi regulator said earlier this year:
“The FSRA notes that virtual currencies, although not legal tender, are gaining interest globally as a medium of exchange for goods and services.”