In today’s digital era, trust is not an optional add-on; it’s the quintessential bedrock. The virtual asset (VA) sector, from inception, promised a new kind of trust – coded, not conferred. The underlying blockchain, promised a future where every transaction would be transparent, traceable, immutable, enabling an ambitious inflection point – To narrow the economic divide, allowing formal financial access to the unbanked; To trim the fat in finance, cut down intermediaries, and level the playing field; ultimately to give everyone a fair shot at a global economic pie.
Yet, through much of 2022-23, this vision met reality with a thud, threatening to implode without intervention. The spate of recent shocks in the VA sector rattled the nerves of all – from governments, to banks, to the average person on the street. What has been even more incredible is the sustained resilience that continues to impress. The ecosystem has to be commended on its ability to bounce back stronger, having not only acknowledged the systemic weaknesses, but also making resolute efforts to reform.
The high-profile collapses across fintech and banking over these 15 months have been cautionary tales, highlighting that what we are really trading is not just assets – it’s information. And this future we are devising together is about transforming raw data into a currency of trust; in a market that is open to all. Regulatory certainty and industry transparency, built on open communications and responsible marketing by all, are the foundation to nurture consumer education and fast-track market maturity.
Trust and maturity require financial inclusion
The path to maturity is not just about weathering storms; it is about designing smarter radars and building better vessels. How does that work in practice? The very industries that have thrived under the inflationary pulse of a fiat economy are now co-architects of the new model of crypto-economics. They are shaping a future where prosperity is not just about wealth, but about access. This represents a compelling proposition that can only be assured with cohesive cross-border regulations.
This vision has evolved from merely being a target to keep pace with innovation, to a fundamental necessity for delivering much-demanded financial inclusion. Tokenisation, is one mechanism to unlock any real and/or virtual world assets, to everyone that may elect to participate. It is not an alternative but rather, a necessary enhancement to an existing system. This intrinsically makes assets more (i) accessible and ownable, (ii) fluidly tradeable, and (iii) fully traceable without intermediaries, using smart contracts encoded on proven DeFi governance protocols.
Market education must keep pace with technological advancements
Ongoing advancements across Blockchain, Web3, AI and the Metaverse, are not a coincidental melding of tech trends. The landmark milestones that Blockchain has showcased in 2023 are in fact outcomes of decades of synchronised R&D. These serve as an autonomous catalyst for a well-designed VA overlay to power the Future Economy. The Metaverse has already started to rewrite the rules of engagement: offering ‘immersive’ experiences, spanning virtual and physical worlds, without any loss of time or value.
These industries are poised to pivot from passive viewership to dynamic consumer interaction. This means a talent’s currency is credibility, and it is earned by empowering the consumer, not just selling to them. Today, the pace of VA research and technological advancement far outstrips the pace of market literacy, and adoption remains unprecedented, which has significantly compressed the industry maturity curve, making consumer education an imperative.
Regulatory transparency and industry marketing play a pivotal role
As media also starts to become more hybrid with little to no delineation across various channels, the customisation of regulatory guidelines as it pertains to the use of various tools to engage with the masses, becomes particularly crucial.
Regulations and enforcement with associated awareness campaigns will be leveraged by governments, as in the UAE, yet industry marketing must also step up to nurture savvy consumers who can navigate the VA waters with confidence, facilitating safe market onboarding, thereby building up the level of understanding so that the market is equipped to make informed decisions.
This becomes an essential ingredient for credibility building and a vital one for sector sustenance. VA service providers must be able to articulate the risks in unambiguous terms, breaking down complex jargon into understandable and necessary facts. Honest, ethical communications are a pre-requisite for a hybrid virtual-traditional economy to finds its voice.
Dubai can lead the charge in striking the right balance between regulation and innovation
The UAE has been a trailblazer in the crypto industry and an active early adopter. As a result, the country continues to lead the pack, not just in terms of volume, but also maturity of adoption.
Recent Chainalysis data has shown the majority of crypto transactions in the UAE have been for institutional and professional investments (67 percent) versus retail (under 5 percent)*. A pre-requisite to fostering institutional adoption is our collective regulatory appetite to remain open to innovation, be nimble in our response, and be able to adapt our operating frameworks in real time to securely meet the evolving needs of a nascent market, which has thus far demonstrated resilience and purpose.
With that said, today, as we stand with this spectrum of options for each jurisdiction and its stakeholders to consider, prioritise and pursue, the one unifying fact is that we are operating in a truly borderless economy. It is not just the technology that’s at stake – it’s the very fabric of our future economy. The VA ecosystem is the base layer to build a deeper, more equitable and more resilient economy that welcomes all, and empowers the unbanked and underbanked to be equal opportunity participants.
So, the real question? How do we weave a digital tapestry that is as secure as it is expansive so that the promise of the VA economy can be translated into a sustainable reality? This is a joint endeavour – owned and steered by us all – government, industry, and consumer, whereby each one of us is not just a participant but one of its architects, shaping a future where every digital handshake is a bond of trust.
* Data between July 2022 and June 2023, according to Chainalysis’ 2023 Annual Geography of Cryptocurrency Report
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