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UAE and Germany – expected to strengthen their positions as market leaders on digital asset regulations

The United Arab Emirates (UAE) and Germany are set to strengthen their positions as market leaders on digital asset regulation, according to new research from London-based Nickel Digital Asset Management (Nickel).

According to the study, 72% of wealth managers, pension funds and other institutional investors expect the regulatory environment for crypto/digital assets to improve and become more constructive over the next two years. This is in line with findings from another recent study by Thomson Reuters which found that 69% of financial professionals believe that regulation will help legitimize the cryptocurrency industry. Nickel authorized research with 200 professional investors from across seven nations who inclusively manage an amount of around $329 billion in assets. The study reveals that around 23% expect no change in the regulatory environment, while just 7% anticipate it will deteriorate. Of those who do anticipate an enhancement in regulation, around 83% believe this will occur over the next 12 months, while 35% expect that it may occur within the next six months.

The research also indicates that a majority (59%) of respondents have been approached by regulators about their cryptocurrency holdings, with 9% having received requests from regulators in multiple jurisdictions. This suggests an increasing interest in what institutions are doing with their crypto investments and may be indicative of a desire to regulate them more effectively. More than half (54%) of those surveyed said they expect to see more clarity around ICOs within two years, while nearly half (45%) said they expect regulators will provide additional clarity on what constitutes a security token (46%).

The majority of professional investors believe that Germany and the UAE will take a huge leap forward as market leaders in the crypto/digital asset space because of their proactive stance in evolving a constructive and sturdy framework for the crypto/digital asset sector. This is according to a survey by Preqin which found that 62% of professional investors expect Germany and the UAE to take a huge leap forward as market leaders in the crypto/digital asset space because of their proactive stance in developing a constructive and robust framework for the sector. However, this is likely to lead to other major countries following their lead as they fear missing out – this is the view of 63% of professional investors surveyed by Preqin. 

The survey also found that 25% expect financial regulators will agree on a global framework for cryptocurrencies over the next five years while 18% said it would take 10 years or more and 13% said they did not know either way. In terms of when professional investors believe financial regulators will agree on a global framework for crypto/digital assets, 23% expect it to happen this year, 29% expect it to be in 2023.

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