Regulatory Arm of UAE Financial Centre Releases Defi Discussion Paper – Regulation Bitcoin News
The regulatory arm of UAE’s financial centre, Abu Dhabi Global Market (ADGM), has released a discussion paper that is seeking stakeholders’ comments regarding the regulation of decentralized finance (defi). The paper also makes clear the regulator’s stance regarding the anonymity of defi transactions.
Paper Not Guidance for Financial Institutions
The FSRA, a regulatory arm of the UAE financial centre ADGM, has issued a discussion paper that seeks the public’s comments on policy considerations for decentralized finance (defi).
The release of the document comes as the defi space has seen strong growth both in terms of the number of users as well as the value of such transactions, the FSRA acknowledges in the paper.
According to the regulatory arm, the discussion paper will serve “as a starting point for a dialogue on how Defi may be eventually regulated.” The FSRA nevertheless clarified that the paper is not a “guidance” for financial institutions. Instead, the paper contains the regulator’s view on the likely medium-term direction over the course of between five and ten years.
In addition, the discussion paper contains the regulatory arm’s so-called “high-level policy positions on how the FSRA might consider regulating Defi.” The document also describes what a future regulatory framework for defi will look like.
Defi Regulation Inevitable
In his remarks following the launch of the paper, Emmanuel Givanakis, CEO of the FSRA said:
DeFi is an emerging part of the global financial ecosystem that holds the promise of delivering more efficient and tailored financial services. In order to achieve this potential, the risks arising from DeFi must be identified and appropriately addressed. We are pleased to contribute our views on DeFi and its potential future direction to the ongoing discussion in the community, in association with industry practitioners.
Givanakis added the contributions made by stakeholders will help the regulator make informed policy choices which in turn address the risks involved with decentralized finance.
While the FSRA has said it will consider contributions from stakeholders, the regulator asserts elsewhere in the paper that regulation of defi is inevitable. The regulator also insisted that “preserving the anonymity of DeFi participants will increasingly become untenable in the medium term.”
Meanwhile, the FSRA has set June 30, 2022, as the deadline for providing comments. After this period, the FSRA will review the feedback and decide on next steps.
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