Global Progress of Digital Asset Regulatory Framework and the Rise of Dubai Encryption Center

Since the beginning of 2023, significant progress has been made in the global regulatory framework for digital assets. The European Union has launched a regulatory framework for the cryptocurrency market and a pilot system for distributed ledger technology, marking an important milestone. UK regulators have proposed comprehensive recommendations covering various aspects such as stablecoins, issuers, custodians, and payment systems.

The Middle East and Asia are also not falling behind. The United Arab Emirates and Hong Kong have introduced innovative virtual asset licensing systems to attract a new wave of regulated market participants. Hong Kong and Singapore have strengthened their regulatory frameworks, focusing on enhancing customer and investor protection. These regions have also clarified the relevant guidelines for tokenized securities and digital currencies, highlighting their commitment to building a safe and transparent digital asset environment.

Recently, with an industry summit held in Dubai, the industry has once again focused on this emerging encryption city. The United Arab Emirates, as one of the world's crypto-friendly countries, is carving out a unique path in the fields of digital currency and blockchain technology.

The UAE is located in the Arabian Gulf and has long been synonymous with innovation and prosperity. In addition to its stunning city skyline, the country is also focused on the future development of finance. Unlike some countries that take a cautious approach to cryptocurrency, the UAE's regulatory policies are open to digital assets.

In recent years, the UAE has launched a series of advanced initiatives, indicating its intention to lead the application of blockchain technology and digital currency. These initiatives span multiple areas, from government adoption of encryption currency to ambitious plans to propel the nation into the blockchain era.

The key to creating a crypto-friendly environment in the UAE lies in the active participation of government agencies and regulatory bodies. Among them, a certain financial regulatory agency has played an important role in fostering an ecosystem that encourages the adoption and development of cryptocurrencies and blockchain technology. This agency is the regulator of a certain international financial center and has been at the forefront of the cryptocurrency revolution. Notably, in September 2021, this agency issued regulatory guidelines related to investment tokens, taking an important step towards creating a favorable framework for recognized crypto tokens.

The comprehensive regulatory reform that took effect on November 1, 2022, particularly concerning the recognition of encryption tokens, further reflects the agency's commitment to providing transparency and structure to the cryptocurrency industry. This robust framework clearly defines the categories of encryption tokens and the code of conduct that companies handling these tokens should follow.

The UAE's main regulatory bodies have played an important role in formulating cryptocurrency regulations. They provide clear guidance for businesses and investors, creating a supportive environment for crypto-related activities. The UAE's ability to balance innovation and compliance sets it apart. While promoting blockchain and cryptocurrency innovation, it has also implemented stringent anti-money laundering and counter-terrorism financing measures, in line with international standards.

Dubai has positioned itself as a global center for encryption innovation. An industry summit will be held in Dubai from April 18 to 19, aimed at gathering global Web3 industry elites and providing an interactive communication platform for entrepreneurs, investors, developers, industry professionals, and global media, including various activities such as gatherings, seminars, hackathons, dinners, and parties.

In terms of cryptocurrency regulations and initiatives, the United Arab Emirates, centered in Dubai, has emerged on the global stage. Its progressive approach to regulating cryptocurrency and adopting blockchain technology has made it a leader in the crypto space. A virtual asset regulatory authority was established in March 2022, responsible for overseeing and nurturing Dubai's Web3 ecosystem. Less than a year later, the authority released comprehensive regulatory guidelines tailored for virtual asset service providers. These guidelines include four mandatory rulebooks, seven specific activity rulebooks describing service provider operational agreements, and a rulebook for virtual asset issuance.

The CEO of a regulatory agency stated at a previous blockchain event that the agency is considering various options to make the regulatory framework suitable for all types of participants. One focus is on finding ways to manage the compliance costs for small encryption entities. Currently, there are not many companies that can afford the regulatory costs, and the new regulatory proposals include allowing larger market participants to custody smaller market participants.

The CEO pointed out that Dubai's encryption ecosystem is home to nearly 2,000 Web3 or encryption companies, emphasizing the importance of not disrupting the existing ecosystem through regulatory measures. He outlined the agency's inclusive regulatory approach and stated: "This is not exclusive regulation; anyone can participate."

He emphasized the role of regulatory certainty in attracting investment and promoting organizational development. He pointed out that while regulatory frameworks may be challenging, they ultimately contribute to the maturity of the industry and facilitate long-term planning for businesses.