Why Should Crypto Companies Self Regulate Before The Onset Of Government Regulations?
The crypto market in the UAE, has gained more popularity in recent years. Not many people use cryptocurrency as regular money, but it needs to remain a stable payment option if it is considered in the future. Many governments, including the UAE, are trying to form new rules to manage the cryptocurrency market.
Since the cryptocurrency market has been fraught with cases of fraud and scams and being such a new industry with little regulations, it has been an ongoing focus of governments. For instance, there was a theft of 500 million dollars of digital money from an exchange. This incident has caused the regulators to put ongoing pressure to introduce regulations in the cryptocurrency sector.
The introduction of a new crypto law in the UAE opens the opportunity to issue and trade cryptocurrencies like Bitcoin. Furthermore, the new Dubai rule would provide a sophisticated legal policy to protect investors and international norms from overseeing crypto, virtual assets, and NFTs. The VARA regime is set up to encourage collaboration and innovation and prioritize public safety.
The need for self-regulation
Self-regulation establishes guidelines, industry organizations, and a code of conduct for the participants to have a business. Having a self-regulatory body for the cryptocurrency sector has many benefits in the industry, such as,
- Combating heavy regulation
One of the key benefits is demonstrating the industry is being proactive and responsible for protecting its investors, preventing fraud, protecting against cybercrimes, and stamping out scams. It could be enough to appease regulators to delay and stop the introduction of heavy regulation. It means that self-regulation is proved to be more effective by removing the threat of heavy regulation and replacing it with self-regulation.
The high level of uncertainty is eliminated, brings back confidence in the market, and allows companies to plan effectively and focus on innovation.
- Fit for purpose and industry-specific
Industries that are self-regulated ensure that the regulation is fit for purpose and allows innovation in the space to continue and adapt to be able to evolve according to the market changes. Additionally, rather than a one-size-fits-all approach, having separate and specific regulations could develop different types of cryptocurrency, such as private coins, smart contracts, and settlement networks, amongst others.
- Beneficial to government
Self- Regulation can often be helpful for the government as well. It is fast to implement, and the cost burden falls on the industry and not on the government. It is the central selling point of self-regulation as long as the government is involved and is kept informed.
- A global solution
Self-regulation also fights one of the drawbacks of every country potentially having different regulations, making it difficult for companies to work on a global scale. Self-regulatory bodies have an opportunity to collaborate and introduce Global regulations that are consistent and meet the needs of investors and cryptocurrency organizations.
Until all governments worldwide can evolve a suitable regulatory response for cryptocurrencies and blockchains, self-regulation ensures that fraudulent elements do not dupe the customers.
How FlyingColour can help crypto business?
Setting up a cryptocurrency-related business with self-regulated laws will improve and evolve your firm. With FlyingColour, we can assist you in establishing a crypto business in the UAE and making self-regulated laws. In Dubai, registering a business in a free zone is the best option for new and established bitcoin businesses.
FlyingColour is among the most significant business set-up businesses in the UAE, and can help you register your business in as little as a week. Wealso guarantee that the entire step in creating your business goes as efficiently as possible. Our skilled advisers will help you through the process, from registering your business, comprehending regulatory requirements, and determining the cost of a free zone license, to receiving approvals from the appropriate authorities.
