Before Dubai's Virtual Assets Regulatory Authority existed on paper, someone had to build it from nothing. Joining me is Musheer Ahmed, Founder of Finstep Asia and Hong Kong Ambassador for the MENA Fintech Association, who was part of that founding team. Musheer, welcome to Wall Street to Mena.
Thank you for having me.
You were part of the founding team that built VARA. Before it had a rulebook. What did building a regulator from scratch actually look like?
VARA was the first regulator globally to build rules dedicated to crypto. That needed a lot of vision from the senior management — from His Excellency Helal and the Vice Chair — to drive this. The key element when we were building the rulebook was to build for crypto first, rather than trying to reconfigure something from traditional finance. Yes, there are elements of traditional capital markets that were taken into account, but you have to look at crypto first — what is going to happen in the future and build from there. The three main goals we were driven by were: future-first, ensuring strong consumer protection and AML is in place, and building to a high standard globally.
Part of your job was also grandfathering old virtual asset operators into the new licensing regime. How do you convince a company already running to suddenly follow rules that did not exist yesterday?
It is a two-part process. First, educating them about what the regulations are and why they are needed. Second, aligning their businesses with the regulations — verifying that what they are doing falls under the regulations or does not. VARA was unique in that most regulators simply give a deadline for grandfathering. We built out a survey asking existing firms to input details about their business, my team would evaluate it, and then we would have a conversation in the gray areas to figure out their business model in detail. The key was first understanding whether it falls under our purview, then having that conversation about their future plans, and then working with the broader ecosystem — DMCC, DSO, WTC and others — to educate startups that this was now a regulated space.
You have since moved from being the regulator to advising the industry from the outside. What do you see now that you could not see from inside VARA?
Hindsight is always useful. Over the last three years, two things stand out. The tokenisation of traditional finance has accelerated significantly — VARA has been actively looking at this, and pilots like the one running with Dubai Land for property tokenisation are key. The second is how other jurisdictions are opening up and how Dubai will interact with them as they all mature. That coordination question is something I reflect on looking back.
Now let us talk about AI and governance. What is the actual governance gap when AI systems start making treasury decisions with less human oversight?
Technology is transforming treasuries — from both an AI and tokenisation perspective. We recently released a report on treasury operations with the Fintech Association of Hong Kong and APFA. What is happening is that you are moving toward an environment where agents can run autonomously. But the underlying models may not have been thoroughly stress-tested. Having audited agents is going to be very important. Third-party audit of the models and what is being run is also going to be critical — both in the treasury world and in the virtual asset world, as agentic commerce becomes underpinned by stablecoins. We saw just yesterday that Meta reported its AI went into a live environment despite being supposed to remain in test. Anthropic and OpenAI have had the same. The big models are struggling to contain their AI in financial services and digital assets. It becomes highly important to ensure there are double and triple layers of governance, regular audits, and constant close oversight. You cannot just let it operate on its own.
You have spent years bridging Hong Kong and the MENA fintech ecosystem. What does each region still get wrong about the other?
I do not think either region is getting things drastically wrong — they are still discovering each other. The first thing is cultural diversity. It is very important to understand the diversity that exists in MENA, and equally, when someone is coming from the Middle East into East Asia, to understand that diversity as well. The second is commitment. If you are looking to expand into those regions, you need genuine presence — you need to spend time, build businesses, and show that you want to grow and contribute to the local market, not just extract from it. Third — and this is encouraging — both the UAE and Hong Kong governments have signed MoUs at both the government and regulatory level. The SFC in Hong Kong has MoUs with UAE regulators. That is a good sign and is creating better pathways for digital asset firms to operate across both markets.
Are the Hong Kong and UAE virtual asset frameworks actually comparable?
You could say that. In the UAE you have a multi-layer regulatory environment — VARA in Dubai, the Capital Markets Authority at the federal level, and the offshore regulators FSRA and ADGM. In Hong Kong it is just one core regulator for digital assets under the Securities and Futures Commission, with some stablecoin oversight under the HKMA. That is the key distinction. But in terms of frameworks, general governance, and the quality of rules coming out — fairly similar, very high standard, and credible globally.
Are central banks actually ready to operate within tokenised infrastructure?
If you were asking this eight or nine years ago, I would have said it would be a leap. Today, I do not think so. Post-Libra in 2018 and 2019, upwards of 100 major central banks were doing proofs of concept, and some have gone live with CBDCs — which are nothing but tokenised central bank currency. Central banks are aware. The key question now is how mainstream and tier two and tier three banks build the infrastructure to participate in the tokenised economy. I want to give credit to the BIS innovation hubs as well — they are working with several central banks to bring them up to speed through programs like the one here in Hong Kong.
Thank you so much, Musheer Ahmed, for being with us today.
Thank you for having me.
