While Dubai's regulatory framework for virtual assets garnered overall positive reception, concerns have been raised regarding the associated compliance costs, particularly for smaller crypto firms. Matthew White, CEO of Dubai's Virtual Assets Regulatory Authority (VARA), expressed a commitment to addressing these concerns and finding solutions to lower the compliance burden for smaller entities operating in the emirate's burgeoning crypto sector.

Fostering Inclusive Regulation

Speaking at Paris Blockchain Week, White emphasized the importance of ensuring that regulatory requirements are accessible and feasible for all participants in the crypto ecosystem. Recognizing the challenges faced by smaller firms in meeting compliance standards, White underscored VARA's efforts to tailor regulations to accommodate the diverse needs of industry players.

Strategies for Cost Reduction

In pursuit of this goal, VARA is exploring various avenues to mitigate the cost of compliance for small crypto firms. White highlighted the potential for larger market participants to support smaller entities by providing hosting arrangements, thereby facilitating regulatory compliance while fostering collaboration within the industry.

Adapting Regulatory Structures

Dubai's regulatory framework for virtual assets, unveiled last year, mandates authorization for firms seeking to operate in the country. While this regulatory clarity has been welcomed by many in the crypto industry, concerns persist regarding the financial implications for smaller players. VARA aims to address these concerns by implementing flexible regulatory structures that accommodate the diverse needs and resources of market participants.

Industry Response

Several prominent players in the crypto space, including Crypto.com, Deribit's Dubai-based unit, and crypto hedge fund Nine Blocks, have already secured licenses to operate in Dubai under the new regulatory regime. However, White acknowledges that many smaller entities may lack the resources to undergo the regulatory process independently, highlighting the importance of collaborative approaches to compliance.