Crypto Firms’ Compliance With Regulation Should Not Be at the Expense of Innovation — Zak Taher
Zak Taher, the CEO of Multibank.io, said he believes the United Arab Emirates (UAE) is the most attractive investment destination for overseas digital asset companies due to its effective governance and the leadership of its individuals. The UAE’s status within the global financial landscape, combined with its geographical advantages and favorable time zone, further enhances its appeal as an investment destination, according to Taher.
Taher on UAE, Digital Asset Innovation, and Regulation
According to Taher, the proof that the UAE possesses such important attributes is seen in the country’s world-leading crypto regulatory frameworks. To the United States, which has adopted an aggressive approach, Taher said the country’s desire to see crypto firms complying with regulation should not be at the expense of innovation. The Multibank CEO argued that ensuring a “robust balance” between consumer protection and innovation is key to safeguarding consumers without stifling innovation.
Taher meanwhile attributed the reluctance of some prospective crypto users to trade to their lack of confidence in the trading platforms. To instill confidence in these platforms, Taher urged crypto exchange owners to consider embracing regulation. He also suggested that crypto exchanges should prioritize human interaction, customer success, and communication to become more user-friendly.
In his written answers sent to Bitcoin.com News via Telegram, Taher also offered his thoughts on crypto derivatives and touched on some of the common compliance risks associated with these assets. Below, are Taher’s answers to all questions sent.
Bitcoin.com News (BCN): Some U.S. regulatory bodies have taken seemingly aggressive regulatory actions towards crypto exchanges and platforms. What is your view on this, and what should be the right approach to regulating an industry as innovative as crypto?
Zak Taher (ZT): Unlike other crypto exchanges, our core business has been in the financial field since 2005, providing us with extensive experience in navigating authorities and regulatory bodies worldwide. Our go-to approach involves a dual-prong strategy.
Innovation vs. Compliance Balance — When it comes to innovation and compliance, we recognize the inherent risks that innovation introduces. The optimal approach is to strike a robust balance between the two. This doesn’t imply restricting innovation but rather project managing it effectively.
Allocation of Resources: Expanding on the first approach, resource allocation takes center stage. Often, executives concentrate their budget on marketing, hiring top talent from Fortune 500 companies, while overlooking the importance of compliance and legal expertise. Just as in a war, where a strong shield is crucial for protection, allocating resources to compliance is imperative to safeguard both the company and its stakeholders.
BCN: The UAE seems to be at the forefront of crypto regulatory innovation, with the Virtual Assets Regulatory Authority (VARA) providing investors, developers, and companies with clear rules. Besides regulatory clarity, what makes the UAE an attractive destination for talent and capital?
ZT: The attractiveness primarily stems from the country’s effective governance and the individuals leading it. Its position in the global financial landscape, coupled with geographical advantages and a favorable time zone, contributes significantly. The world-class infrastructure, government support, and tax-friendly environment enhance the overall appeal.
The UAE government is dedicated to blockchain, cultural diversity, and ensuring a superb quality of life for residents. Such belief is evident in the establishment of one of the best regulatory frameworks to safeguard users in crypto transactions, reflecting a visionary approach.
BCN: Your company, Multibank Group, claims to be one of the world’s most regulated financial institutions with a long history in regulated derivatives broking. What expertise do legacy platforms such as yours bring to crypto in terms of security, user experience, and regulation?
ZT: It’s funny, in our discussions with crypto-specific affiliates and networks, they express surprise at our unique approach in focusing on partnerships, a strategy less common in the crypto space but prevalent in the FX domain. In terms of user experience, crypto exchanges often boast more user-friendly interfaces and customer journeys compared to FX and derivatives trading platforms. Regarding regulations, the close collaboration between Multibank Group and regulators worldwide proves advantageous. The team’s expertise in obtaining licenses is evident, with the group currently holding 14 licenses and counting.
BCN: Many people often sign up for crypto exchanges but end up not making a single trade. What are some of the issues faced by crypto newbies that stop them from trading or owning digital assets, and how can these be solved?
ZT: The cornerstone is trust, and the remedy lies in regulation. It’s not surprising that people, especially newcomers, hesitate to invest. It’s reminiscent of the caution exercised with a bank. Times have swiftly changed since the last bull market, contributing to increased hesitancy. A significant means of instilling trust in individuals depositing their hard-earned money into the exchange is through regulation. This assurance stems from holding proper licenses and expertise in Tradfi. This approach effectively mitigates fear, encouraging individuals to feel confident about making deposits. Additionally, the organization’s emphasis on human interaction, customer success and communication, positions it as a people-first company, offering a more connected level of account management, especially for novices needing a helping hand.
BCN: Recently, your platform introduced a “Panic Sell” button on its crypto exchange. What is the reasoning behind the introduction of this button?
ZT: In a bear market, the cryptocurrency exchange scene can resemble a bit of a cycle, with users shifting from one platform to another, often involving seasoned cryptocurrency enthusiasts. While this dynamic has its merits, it’s crucial to emphasize outreach to newcomers, a goal we actively pursue in the FX and Tradfi space. Our panic sell feature adds a playful element, allowing users to swiftly liquidate their tokens in challenging situations, giving them that edge. Such features are not only enjoyable but also prove helpful for crypto novices, particularly those seeking efficiency in their initial experiences in the space.
BCN: Derivatives such as options and futures have dominated cryptocurrency trading since their debut around 2014. As you may be aware, these products are also heavily favored by institutional investors. What common compliance and regulatory risks do you see for crypto derivatives?
ZT: In the realm of crypto derivatives, compliance and regulatory risks demand a multifaceted approach. To address anti-money laundering and counter-terrorism financing concerns, one needs robust know your customer (KYC) and know your transaction (KYT).
From a regulatory standpoint, vigilance in market abuse surveillance is crucial, involving the implementation of systems to monitor market manipulation, employing data analytics, and establishing whistleblower programs.
Global expansion requires a nuanced approach due to jurisdictional variations. Recognizing diverse regulatory approaches in each country is essential, especially for futures or options trading. Establishing common rules that align with regulatory guidelines becomes imperative to navigate the complexities of global markets effectively. This comprehensive strategy ensures regulatory compliance while fostering a secure and protected environment for users engaging in crypto derivatives.
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