Home CryptocurrencyBitcoin How Will the FTX Collapse Affect Dubai’s Crypto Ecosystem?

How Will the FTX Collapse Affect Dubai’s Crypto Ecosystem?

by SuperiorInvest

With the FTX contagion affecting various sectors of the global crypto ecosystem, leaders in Dubai have weighed in on how the debacle will affect the fledgling crypto hub in the United Arab Emirates (UAE).

From tighter regulations to better projects leading the way, various experts have given their views on how Dubai and the UAE’s crypto environment will affect the collapse of the FTX exchange.

Kokila Alagh, founder and CEO of KARM Legal Consultants, believes the collapse of FTX will lead to greater scrutiny and diligence before projects are approved in Dubai’s licensing process. She explained that:

“With FTX misappropriating funds or restricting disclosure, these licensing authorities must now take a deep dive into the technology. Simply submitting financial documents will not be enough, ongoing and real-time monitoring of these platforms may be one way forward.”

Alagh also told Cointelegraph that the collapse of FTX may lead to better projects taking the lead in this space. “Any major setback in a growing sector clears the way for stronger projects to lead and clarify projects that lack solid foundations,” she added.

Irina Heaver, a partner at Keystone Law Middle East, also believes that stricter regulations are on the way. Heaver told Cointelegraph that founders need to be prepared for more scrutiny from authorities as well as users and investors. She explained that:

“They also each need to put in place stronger internal compliance and auditing functions, consult with legal counsel when in doubt, and take additional steps beyond those currently required to prove to users that the project is doing the right thing.”

According to Heaver, authorities also need to consider taking a hard look at influencers promoting “carpet-pulling, pump-and-dump schemes, and fake token sales.” Citing Shark Tank star Kevin O’Leary’s promotion of the FTX exchange and how people were able to put their funds into FTX after being convinced, Heaver believes promoters must also face scrutiny.

Meanwhile, Talal Tabbaa, CEO of CoinMENA, a trading platform that secured provisional license from VARA, says Dubai’s history is full of examples of great challenges and rising to the occasion. He explained that:

“The collapse of one company will not change the vision of the UAE to become a global crypto hub. In fact, the FTX incident confirms how important it is to have a comprehensive regulatory framework in place.”

The CEO also pointed out that the Luna, Voyager, Celsius and FTX incidents were a failure of governance and effective risk management, not a failure of cryptocurrencies. “These were institutional failures rather than technical failures,” he noted. According to Tabbaa, this distinction is very important.

CoinMENA’s CEO also compared the incident to an Internet bubble. According to Tabbao, when the dot-com bubble burst, it was not the Internet’s problem, but the failure of the companies that build on the Internet. The CEO noted that the same is true for the crypto space at the moment.

Related: FTX Contagion: Which Companies Were Affected by the FTX Collapse?

The FTX exchange was one of the first exchange to secure approval from the Dubai Virtual Asset Regulatory Authority (VARA), which is the regulator overseeing virtual asset service providers that aim to operate locally. In July, the FTX exchange was approved under the Minimum Viable Product (MVP) program. continue testing and operation.

However, due to the circumstances surrounding the FTX exchange, VARA recently revoked the approval for FTX’s local counterpart, FTX MENA. The regulator also confirmed that the entity has not yet obtained consent to have clients on board, which it confirms No clients have been exposed yet.

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