Chairman of Baker McKenzie Habib Al Mulla said it is only a matter of time before the technology changes the business landscape
Owing to their volatile nature and the controversy that surrounds them, cryptocurrencies are likely to be regulated soon, according to the founder and chairman of Baker McKenzie, Dr Habib Al Mulla.
Speaking at the Arabian Business Startup Academy, Dr Habib Al Mulla said it is only a matter of time before the technology changes the business landscape.
“While cryptocurrencies remain relatively unregulated, I believe the near future may experience a change to that. Countries around the world… [are] trying to determine how they are going to treat [cryptocurrencies]. Some are welcoming, others are cautious. Some countries are downright antagonistic,” Al Mulla said.
“It’s no longer a question of ‘if’ or ‘when’, it’s now a matter of ‘how’ and ‘to what extent’ cryptocurrencies and underlying blockchain technology will be regulated before they [change] every aspect of modern business,” he added.
Currently, there are approximately 200 cryptocurrency exchanges around the world, the majority of which are not regulated, according to Dr Al Mulla, meaning that most are not subject to the most basic disclosure obligations, such as disclosure of ownership, financial data or location.
He explained that because these cryptocurrency exchanges are based outside of sophisticated jurisdiction to avoid regulation and prosecution, regulators remain unclear on how to normalise them, with most suggested frameworks largely untested or still in the consultation phase.
He referred to Japan’s introduction of a cryptocurrency exchange license, claiming regulation can be made possible with slight changes to current rules.
“The rule of thumb is that these exchanges would need to be licensed and fit in with existing regulatory frameworks. And they can do that easily, in fact, with waivers or modifications to the existing rules,” he said.
“Asia seems to emerge as a power horse in that field due to its looser regulations and the presence of crypto platforms from the early days of Bitcoin and due to the penetration of crypo transactions in the local culture,” he added.
The UAE is yet to house a regulated blockchain-based exchange. While Bitcoin wallet BitOasis is often mistaken as an exchange, it does not act as intermediary or a marketplace, according to its website.