The regulator for Abu Dhabi’s international financial centre is seriously considering regulations for the cryptocurrency industry, a move that could see exchanges and intermediaries move into the financial zone.
In an announcement on Sunday, the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market said it is currently reviewing the development of a regulatory framework with industry firms and relevant authorities.
If established, the regulatory move would establish the international financial sector as friendlier shores for cryptocurrency exchanges and firms.
The regulator said :
“[R]eviewing and considering the development of a robust, risk-appropriate regulatory framework to regulate and supervise activities of virtual currency exchanges and intermediaries. In considering such a framework, the FSRA intends to consult and work closely with industry participants and relevant professional bodies.”
The development comes within months of guidelines released by the Abu Dhabi government for cryptocurrencies and ICOs in the capital of the United Arab Emirates (UAE). In October, Abu Dhabi’s financial markets regulator ruled out a “one size fits all” regulatory approach to the sector, separating ICOs as securities and cryptocurrencies as commodities.
It’s a marked turn of events for the development of the sector in the region after bitcoin ducked a prohibitive ban by the UAE’s central bank a year ago. Yesterday’s announcement follows a public warning on investments risks in ICOs by UAE’s Securities and Commodities Authority (SCA), the capital’s financial markets watchdog.
In its announcement, the FSRA also touched on the advent of cryptocurrencies as a medium of exchange. Friendly regulations could see the use of cryptocurrencies in payments, if only within the international financial center of over 40 companies.
“The FSRA notes that virtual currencies, although not legal tender, are gaining interest globally as a medium of exchange for goods and services.”
Meanwhile, the central banks of the UAE and Saudi Arabia are jointly working on the development of a cryptocurrency that could soon see cross-border transactions using a blockchain-based cryptographic token. Elsewhere in the region, Dubai is exploring the use of blockchain technology in sweeping measures in areas including the government, a state cryptocurrency, and a citywide payments system.