The UAE’s Reaction to the FTX Aftermath Charting the Course in Crypto Regulation in Dubai Dubai Virtual Assets Regulatory Authority Regulating Digital Assets Market What is FTX?
- November 30, 2022
- Posted by: axiom_admin
The company is owned by Sam Bankman-Fried, who, in October 2022, had an estimated net worth of $10.5 billion.
The FTX Debacle.
FTX was the third-largest crypto exchange; however, recently, CoinDesk published an article citing some balance sheet numbers of the trading arm of FTX, Almeda research, stating that of the $15b presented on the balance sheet, only 130m were in fiat. The most significant part of the assets was in FTT, with $3.6b in value, which meant that most of the net equity of Almeda’s research was its own token.
People started to worry about the solvency of Alameda Research and FTX, and when Binance CEO, Changpeng Zhao, announced that they would liquidate all its FTT token holdings due to the revelation, FTX and the crypto sphere began to experience the effects immediately.
FTX Filing for Bankruptcy.
On November 11th, 2022, FTX started Chapter 11 bankruptcy proceedings in the US court system following the liquidity crisis. The losses were enormous, and some may say gruesome.
Longing for Regulation.
As a result of the whole FTX fiasco, the entire world of crypto is desperate for regulation in the most rigorous manner. Unsurprisingly, the cryptocurrency market cannot be expected to self-regulate.
Regulation in Dubai, UAE
Every collapse builds the case for more stringent regulation. Japan, EU, Singapore and Dubai are leading crypto regulators. Dubai has taken numerous steps, such as setting up a Virtual Assets Regulatory Authority. The authority aims to regulate the digital assets market in Dubai. New companies operating in the digital and crypto space should heed the regulations stipulated by such authorities, especially in the preliminary stages of the company formation Business setup consultants in Dubai can help immensely ease the process.
Challenges of regulating the Crypto Space
Regardless of how governments have been scrambling to put together a regulatory framework for unfair trade in cryptocurrency, regulators face the difficult task of balancing the free market with oversight while taking a sensible approach towards decentralized and centralized platforms. The cryptocurrency players understand their market better than others; however, their involvement in formulating the legal framework raises a conflict of interest.
The Goal of Regulation
There is a need to focus more on protecting customer money, compliance with strict accounting principles, mandatory use of licensed custodians, and detailed disclosures. A comprehensive regulatory system requires an understanding of the activities of exchanges. We can, however, expect to see a series of regulation waves triggered by successive meltdowns.
The FTX fiasco has put the whole market at risk. This is just one example suggesting that the market needs to be intensely regulated. The UAE stand as a trailblazer in this regard. Therefore, new companies in the country operating in the digital and crypto space should observe the regulations set by the relevant authorities, especially in the preliminary stages of the company formation. Business setup in the UAE can be helped immensely by the experienced business setup consultants of the region. We advise you to leverage their expertise throughout the whole process of setting up your business.