In the UAE, five different regulators now oversee crypto under a new federal law, with penalties up to one billion dirhams. What used to be a loose experimental space is turning into one of the most structured digital asset frameworks in the world. Joining me is Isabella Chase, Head of Policy for EMEA at Chainalysis. Isabella, welcome to Wall Street to Mena.
Thank you. It is great to be here.
Five regulators for one industry — is that smart specialisation or just five headaches instead of one?
I would land on the side of smart specialisation. The model we see in the UAE is really one of having deep expertise across a very wide range of supervisory jurisdictions and mandates, and that is allowing the UAE to build a very interesting and active crypto community. The collaboration between those five regulators and the industry — led through associations like the Fintech Association — is a really good example of taking what could be a complex framework and making it genuinely work for a community that is maturing at pace.
The DFSA just handed firms the job of policing their own tokens. Does that raise the bar or just pass the risk down the chain?
It really just reflects reality. The token space is evolving so quickly that list-based approval regimes cannot keep up. What the DFSA is saying is — you know your tokens, you know your customers, and it is going to be up to you to own that risk management. So I would say it is a higher bar, not a lower one. And this is a challenge regulators across the world are currently grappling with. I think the DFSA is taking a very proactive approach that many regulators will be watching and wanting to learn from.
One billion dirhams in fines for non-compliant projects — is that a real threat or a scary number on paper?
It will be very interesting to see how the market evolves after September 16th when the new law comes in. We see many significant crypto markets now shifting from the implementation and licensing phase into much broader enforcement — Europe just had the end of its MiCA grace period. For supervisors, that requires different tooling and different skill sets. But the UAE supervisors are very well resourced, and although the expansion of the remit is considerable, I think they will be in a good position to enforce the regime and ensure market participants are meeting the required standards.
As the UAE scales as a stablecoin and payments hub, what financial crime risks should regulators and banks be aware of?
This is such an important part of the digital asset adoption story. Our Crypto Crime Report found $158 billion of illicit activity last year — up 145% year on year. Although in perspective, that is still around 1.2% of total crypto volume. But stablecoins are playing an increasingly interesting role in that picture. Last year, 95% of all inflows to sanctioned entities and jurisdictions came from stablecoins. That is a real risk that supervisors need to be alive to. What we see across the ecosystem is that when you have unauthorised or poorly regulated firms, they are the ones allowing risk into the system. The priority for supervisors must be cracking down on unauthorised businesses — and that is exactly what we see with the UAE's new law.
Algorithmic and privacy tokens are banned in the UAE. Is that a safety move?
Historically, privacy tokens and algorithmic mechanisms have carried a lot of risk — from a financial crime perspective, but also from a consumer protection and markets perspective. Jurisdictions can make their own choices on what to prohibit. But it is really important that as they do so, they do not ignore that risk going forward. As the Financial Action Task Force says, continue to monitor the risk, review those bans on an ongoing basis, and ensure they are still appropriate for what they are trying to achieve.
Five frameworks moving at once — are they actually in sync?
Ensuring coordination across five entities is always going to be challenging. But the UAE has a lot of experience to draw on from traditional financial sectors, which have had multiple regulators for many years. The fact that VARA exists as a specialist centre of excellence for digital assets is a huge bonus — it provides a supervisor that can anchor expertise and share knowledge across the five. And what you see in fact is more collaboration and working together, which is genuinely positive.
Thank you so much, Isabella Chase.
Thank you.
