We are used to crypto markets moving fast, but this level of positive regulatory movement is unprecedented. In the past two weeks, there were several important announcements about cryptocurrency regulations from around the world. Starting in the UAE, His Highness Sheikh Mohammed bin Rashid Al Maktoum approved a first-of-its-kind law to regulate virtual assets in Dubai and established the Dubai Virtual Assets Regulatory Authority. Later on the same day, the United States issued an executive order to regulate cryptocurrencies. And yesterday, the president of Ukraine signed a law to regulate cryptocurrencies as well. It is unclear if the bear market has reversed course, but what is clear is that crypto’s regulatory market is definitely bullish. The most interesting part of these announcements was the reasons the countries stated as the driving force behind their decisions to regulate crypto. Below are three that really stood out:
Become global leaders: On Twitter, His Highness Sheikh Mohammed bin Rashid said, “The future belongs to those who design it.”, and that Dubai aspires to be “the most advanced virtual asset ecosystem in terms of organization, governance, and security”. The Whitehouse executive order fact sheet calls for measures to “Promote U.S. Leadership in Technology and Economic Competitiveness to Reinforce U.S. Leadership in the Global Financial System.” Both the UAE and USA recognize the importance of seizing the opportunity, being first movers, and are seeking to establish a regulatory framework to attract the top companies, talents, and investors in the world.
Protect investors, customers, and businesses: This is the most obvious benefit of clear regulations. The best way to eliminate bad actors and provide stability to the sector is through clear and effective regulations.
Foster innovation: This is key. Cryptocurrencies are a technological innovation, similar to the internet. Clear regulations allow for innovative companies to operate within clear rules and guidelines.
It is nice to see that the old lazy tropes of “crypto is used for illicit purposes” are being replaced with more factual-based reasoning. As reported by The Chain Analysis “Crypto Crime Report,” transactions involving illicit addresses accounted for just 0.15% of total cryptocurrency transactions. Of course, there are still scams like rug pulls and pump and dumps going on, which is where regulation can step in and protect market participants.
The three regulatory drivers stated above show that regulators are beginning to understand the multidimensional benefits of cryptocurrency as a technology. Exciting times are ahead for our growing industry.