There’s no doubt that the cryptocurrency market has grown into a global entity, and one that currently has a total estimated market cap of around $130 billion. With more than 100 coins also vying for market supremacy, there’s an intense amount of competition and a range of options for potential investors.
There are a number of challenges facing this market, however, not least the issue of regulation. Not only has the crypto market struggled with a lack of stringent regulatory measures since its inception a decade ago, but countries across the globe are taking a different stance on how they should treat the sector.
In this post, we’ll look at how the financial authority of Abu Dhabi is leading the way in the field of regulation, while asking what the future holds for the global cryptocurrency space.
How the Abu Dhabi Global Market launched a regulatory framework
While the MENA economy was initially loath to embrace cryptocurrency, rapid innovation and growth in the market has altered the landscape considerably for investors in Abu Dhabi and similar regions.
As recently as last month, Abu Dhabi Securities Exchange (ADX) issued a detailed thought paper on cryptocurrency and blockchain infrastructure for digital assets, in order to determine the operational criteria for trading digital assets both domestically and across the globe.
This followed hot on the heels of a new regulatory framework launched in the summer, as the market’s financial watchdog (the Abu Dhabi Global Market) finally revealed the result of considerable hard work and a public consultation.
The details of the framework were also revealed to investors through a set of published guidelines, which explains how all crypto assets undertaken by exchanges and custodians would be regulated going forward.
What does this mean for Cryptocurrency regulation on a global scale?
This is an interesting development in the cryptocurrency space, with the Abu Dhabi Global Market becoming one of the first regulators to create a comprehensive plan for the sector.
Given the collaborative nature of the regulator and its relationships with financial centres and institutions from throughout the world, this could also have considerable implications for the global market.
After all, in addition to addressing the full range of issues and risks associated with crypto asset activities (including money laundering and technology governance) the new framework also lays the foundations for further collaboration between national regulators and a more transparent trading environment.
One of the most important elements of this new framework is the implementation of a daily value trading levy, which will be imposed on crypto asset exchanges on a sliding scale basis. This has become increasingly important as cryptocurrencies have become a common exchange for goods and services, as the market continues to experience exponential growth in terms of demand and value.
It’s also important to note that major cryptocurrencies are already accessible through markets of the classical currencies (forex), which in turn has propelled them into the mainstream of the investor’s conscience.
The recent development will ultimately help to regulate specialist and global crypto exchanges, however, creating a more transparent and rewarding experience for investors as a result.