If you’ve been paying attention to the most recent news out today, you definitely should have noticed the way the United Arab Emirates has tackled the task of regulating the cryptocurrency industry in their country.
The government has given the local financial regulation, the Securities and Commodities Authority (SCA) a direct guideline to refer to the industry for feedback in the drafting of nation-wide cryptocurrency regulation.
Luckily the financial authority has complied with the guidelines and is now expecting thousands of submissions from crypto exchanges, crypto brokers, crypto media, crypto experts and almost everybody that is involved in the industry and has tangible experience.
This is one of the best ways to implement a national rule of law, simply because it allows most of the citizens to participate in major decisions and adds that extra bit of democracy to a currency that is designed for spreading democracy.
Are there any similar versions elsewhere?
There have been some cases where the government was listening to a crypto representative and heeding their feedback, but in most cases, this was just to get more basic knowledge about the technology, rather than the feedback of experts on how the regulation should be implemented.
The best method for a financial regulation may have been implemented by South Africa of all counties. The Financial Sector Conduct Authority (FSCA) has tasked almost all of their regulated entities to support the remuneration policy for customers that suffer extreme losses, while they themselves have taken the responsibility of spreading financial education in the country.
This is definitely not a direct approach similar to how the UAE is doing it, but it is still one of the best ones we can see so far. Not only does it apply to Forex, CFD and stocks brokers, but also now to cryptocurrency exchanges and etc.
If you click here for the SA forex brokers https://forextradingbonus.com/brokers/south-africa/ you will immediately see that almost all of them have a redirection method in their education section where the customer is immediately sent to the FSCA’s website for helpful educational content and sometimes even personalized webinars.
But, as already mentioned, the SA regulation cannot come close to the methods that the United Arab Emirates is trying to implement.
Let’s take a look at how all of this can unfold and what was the reason that the SCA decided to take this route.
What could the new UAE regulation entail
It is obvious that every crypto expert and person who is involved in the industry is a direct supporter of the blockchain. Therefore, it is very unlikely that they will supply feedback that would hinder the development and popularization of cryptocurrencies in the Emirates.
However, what we need to understand is that a CEO of a crypto exchange will have completely different types of feedback compared to a journalist on a crypto news website.
Because of this, we should expect, or the SCA should expect for that matter, that some of the feedback is going to be extremely contradictory to each other. Therefore they need to develop some kind of filtering system which they can use to assign larger priority to feedback relevant to the segment that the person is experienced in.
It would go something similar to this:
The CEO of a crypto exchange could provide expert feedback on how cryptocurrencies could be traded on local exchanges. For example, they can provide insight into how much an average crypto trader can make through leverage. How much should be deposited for a profitable run and the generic details of trading cryptos overall.
This will help the SCA determine whether a cap should be placed on the maximum leverage crypto exchanges can offer, and the maximum deposit that they can require from traders.
A journalist in a crypto media outlet would be able to supply information on whether or not it’s relevant to place some kind of restrictions on the promotion of cryptocurrency options in the country. Whether or not the ads have a direct effect on a person’s mindset towards cryptos and if they are exploiting the inexperience of beginners.
A crypto expert would easily identify the most relevant ways of taxing cryptocurrencies in a way that would guarantee the profitability of not only crypto companies that offer trading services to their users but also the profitability of people using these services.
Furthermore, they would identify the benefits to the country much more easily.
Will the UAE change the landscape?
Unfortunately, most of the countries have already drafted their regulations, but that does not mean that they cannot amend it in the long run.
Currently, it’s very hard to convince the government that regulation isn’t particularly working in a specific market, simply because there is not much understanding or points for comparison.
Allowing the UAE to operate under a user-generated regulation would provide amazing examples to large countries like the UK, the USA and various other nations on how light and more informed regulation could affect their local economies.
For other countries that haven’t drafted the legislation yet, this is the perfect opportunity to find out how the UAE does it and copy it completely.