After skyrocketing last year and plummeting this year, crypto markets remain in limbo. We’re all waiting to hear about what US crypto regulations will look like when they roll out. Meanwhile, in Dubai, the Virtual Asset Regulation Authority (VARA) has been operating for a few months. Are we already behind?
What is VARA?
VARA is a regulatory body in Dubai that aims to protect investors, facilitate economic activity and promote transparency in the crypto space. The agency operates under the guidance of the Dubai Economy Department and has three main responsibilities: regulating, educating, and developing all things related to virtual assets. Dubai’s government established VARA as part of Dubai’s Virtual Asset Law (VAL) in April 2022.
Recently, crypto billionaire Sam Bankman-Fried (SBF) got VARA’s approval for his crypto platform FTX to receive institutional funding. So, essentially, VARA is an example of a proactive, future-facing effort to recognize a shift in the global economy. Dubai embraced the possibilities of new tech and new currency.
How does this compare to crypto in the US?
It’s been a tumultuous few months for crypto markets. The US is still undecided on how to regulate crypto. Recently we learned a digital dollar will arrive, but we don’t know when. As far as crypto regulation, the SEC has gone on a litigation spree while Chair Gary Gensler insists all crypto except Bitcoin qualifies as a security. A bill drafted in Congress hasn’t gone anywhere since- reports suggest that the legislation proposed that the CFTC regulate crypto.
Meanwhile, in Dubai, VARA was established and has now been operating for months. Authorities were able to recognize a new form of asset and acted to build a regulating body around it. The contrast between approaches is like night and day.
Takeaways
There’s value in a measured approach, especially when dealing with a highly volatile, relatively new technology. That’s especially true when that technology is also a new form of asset. However, what we know about VARA in Dubai suggests that US crypto regulations have become more about political clout than trying to understand and regulate crypto.
