As the FTX infection affected various sectors of the global crypto ecosystem, industry leaders from Dubai commented on how the debacle would affect the budding crypto hub in the United Arab Emirates (UAE).
Various experts have given their opinion on how the collapse of the FTX exchange will affect the Dubai and UAE crypto landscape, from stricter regulations to better projects.
Kokila Alah, founder and CEO of KARM Legal Consultants, believes the collapse of FTX will lead to more scrutiny and scrutiny before projects are approved through the Dubai licensing process. She explained:
“Due to misuse of funds or limited disclosure by FTX, these licensing authorities now need to dive deep into the technology. Simply submitting financial documents will not be enough, continuous real-time monitoring of these platforms could be one way forward.”
Alah also told Cointelegraph that the collapse of FTX could lead to top projects becoming leaders in the space. “Any major setback in a growing sector provides an opportunity for stronger projects to take the lead and clean up projects that don’t have a solid foundation,” she added.
Irina Khiver, Partner at Keystone Law Middle East, also believes tougher rules are just around the corner. Heaver told Cointelegraph that the founders should be prepared for more scrutiny from the authorities, as well as users and investors. She explained:
“Each of them should also implement stronger internal control and audit functions, consult a lawyer when in doubt, and take additional steps beyond those currently required to prove to users that the project is working properly.”
According to Heaver, authorities should also consider taking a close look at influencers who promote “carpet pulling, pump and dump schemes, and fictitious token sales.” Referring to how shark tank star Kevin O’Leary promoted the FTX exchange and how people could invest in FTX after being convinced, Heaver believes promoters should also be subject to scrutiny.
Meanwhile, Talal Tabbaa, CEO of CoinMENA, a trading platform that received a temporary license from VARA, said Dubai’s history is full of examples of big problems and solutions. He explained:
“The collapse of one company will not change the vision of the UAE to become a global crypto hub. In fact, the FTX incident confirms how important it is to have a comprehensive regulatory framework.”
The CEO also indicated that the Luna, Voyager, Celsius, and FTX incidents were due to mismanagement and effective risk management, and not a cryptocurrency crash. “These were organizational, not technical failures,” he said. According to Tabbaa, this distinction is very important.
The CEO of CoinMENA also compared the incident to the dot-com bubble. When the dot-com bubble burst, Tabbaa said, it wasn’t a problem with the Internet, but a failure of companies operating on the Internet. The executive noted that the same currently applies to the crypto space.
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FTX was one of the first exchanges to receive approval from the Dubai Virtual Asset Regulatory Authority (VARA), the regulator that oversees virtual asset service providers who seek to operate locally. In July, FTX was approved under the Minimum Viable Product (MVP) program to continue testing and operations.
However, given the circumstances surrounding the FTX exchange, VARA recently withdrew the authorizations for FTX’s local counterpart, FTX MENA. The regulator also confirmed that the organization has not yet received approval for onboard customers, confirming that no customer has yet been disclosed.