According to an official statement from Oct. 15, the SCA will be collecting public feedback on the draft regulations until Oct. 29 before providing the final drafted legislation regarding the industry.
The United Arab Emirates’ (UAE) Securities and Commodities Authority (SCA) has published draft regulations for crypto assets.
All parties involved in the crypto industry, including investors, brokers, financial analysts, researchers, media and others, are invited to provide their feedback on the document, the SCA noted, adding that the proposals will be taken into consideration for the final regulation.
Seeking feedback from the industry
Providing guidance after enforcing regulation
As noted in the statement, the draft consists of 28 parts covering all aspects of the crypto asset industry in the UAE, including requirements for token issuers, security and custodial policies, measures for protecting investors and combating financial crimes, information security controls, as well as technology governance standards, among others.
Once the regulation is implemented, market participants will reportedly be able to request the SCA’s guidance on a specific part of the industry and regulatory requirements through its electronic services system, the authority said.
ICOs in the UAE
Previously, the SCA announced its plans to introduce initial coin offering (ICO) regulations in the country by the end of the Q1 2019. At the time, the authority’s CEO Obad Al Zaabi noted significant demand in ICO registration and licensing, while local media reported that the SCA will be working with the Abu Dhabi Securities Exchange and Dubai Financial Market to develop a platform for ICO token trading.
In early 2019, the UAE government and Saudi Arabia announced an agreement to cooperate on the creation of a cryptocurrency in order to better understand the implications of blockchain technology as well as facilitate cross-border payments.
UK Adds Further Regulation to Already-Strict 5AMLD Guidelines
To combat the alleged risks associated with crypto assets and their networks, Her Majesty’s Treasury, the United Kingdom’s finance and economics department, has added additional measures.
The new Money Laundering Regulations, or MLRs position the U.K.’s Financial Conduct Authority (FCA) as the Anti-Money Laundering (AML) overseer for certain crypto objectives, Director of Retail and Regulatory Investigations, Therese Chambers said in a March 6 speech.
These MLRs go “beyond the 5MLD to include a broader set of activities, such as Initial Coin Offerings (ICOs), as recommended by FATF last year”, Chamber’s said.
The EU already has strict AML
The European Union, or EU, cemented new AML regulations in July 2018, called the 5th Anti-Money Laundering Directive, or 5AMLD.
To avoid the new 5AMLD regulations, crypto exchange Deribit left the EU’s Netherland’s in January 2020, finding solace in Panama.
In her speech, Chambers claimed cryptocurrencies carry a significant money laundering risk, as they allow financial value transfer without requiring a “financial intermediary”, meaning users can send funds anonymously.
Chambers noted the belief that protection goes hand in hand with innovation growth.
MLRs pertain to crypto on-ramps
Chambers explained that the FCA’s regulatory overwatch focuses more on the business dealings within the crypto space.
MLRs pertain to exchanges that offer fiat pairings, as well as those dealing in crypto pairings. Chambers also included FCA authority over custodial wallet providers, ICOs, IEOs and crypto ATMs.
Any operation conducting any of the mentioned activities must show the FCA risk assessment, customer due diligence, transaction monitoring, record-keeping and suspicious activity reporting, Chambers detailed.
Chambers added:
“When a firm arrives at the FCA’s gateway looking to apply for registration, we believe that a ‘good’ application will clearly demonstrate to our authorisations team that they have robust systems and controls to cover each of these areas. But fundamentally, we are looking for more than just whether the firm has the right policies and procedures, we need to be satisfied that the firm take seriously their responsibilities to prevent their business being used to launder the proceeds of crime.”
Although Chambers mentioned that protection supports innovation, the anonymity behind Bitcoin and other crypto assets is one of the industry’s trademark attributes. Still, governments continue adding such regulation.
In August 2019, Cointelegraph reported on the Financial Action Task Force, or FATF, which also aimed to snuff out anonymity in the crypto space.
