Industry experts at the Virtual Asset Regulatory Authority (VARA) Media Breakfast briefing in Dubai on Monday highlighted the growing importance of artificial intelligence (AI) in ensuring security and compliance within the virtual asset industry.
They discussed the potential benefits of combining AI with blockchain technology to enhance security, efficiency, and transparency.
Specifically, Sean McHugh, Senior Director of Market Assurance at VARA, underscored the crucial role of AI in combating financial crime. He explained how AI can be used to detect suspicious activity, prevent fraud, and protect consumers. “AI is a powerful tool for combating financial crime. From detecting deepfakes to monitoring transactions for suspicious activity, AI can significantly enhance our ability to protect consumers and maintain market integrity.”
McHugh emphasized the synergistic relationship between AI and blockchain, noting that blockchain can provide a decentralized and secure foundation for AI while AI can optimize data management and analysis on blockchain networks. “The intersection of AI and virtual assets offers a wealth of opportunities. By leveraging the strengths of both technologies, we can create innovative solutions that drive efficiency, enhance security, and promote transparency in the virtual asset space.”
He also discussed the importance of addressing regulatory challenges and fostering a conducive environment for the development and adoption of AI-powered virtual asset solutions.
He emphasized the role of regulatory bodies like VARA in providing clear guidelines and supporting responsible innovation.
While acknowledging the potential benefits of AI, McHugh stressed the importance of using AI responsibly and ethically. He emphasized the need for human oversight to ensure that AI algorithms are not biased and that their outputs are interpreted correctly. “While AI can be a valuable asset, it is essential to use it responsibly and ethically. Human oversight is crucial to ensure that AI is used effectively and that its limitations are understood.”
He highlighted the need for a collaborative approach to regulation, both domestically and internationally, to create a more harmonized environment that promotes innovation while protecting consumers.
On his part, Jehanzeb Awan, Founder & CEO of J. Awan & Partners, Dubai, echoed the need for balanced regulation to support the growth of AI-powered virtual assets. “By striking a balance between fostering innovation and protecting consumers, we can create a thriving ecosystem for AI-powered virtual assets,” Awan said. He discussed the various challenges and opportunities presented by the intersection of AI and virtual assets, emphasizing the need for tailored regulations that address the specific risks and benefits associated with different AI applications. “A one-size-fits-all approach to regulation is not effective in the virtual asset space. We need to develop regulations that are proportionate to the risks involved and allow for experimentation and innovation.”
Also, Sep Alavi, General Partner at White Star Capital, Dubai, emphasized the role of AI in ensuring security and compliance within the virtual asset industry. “AI offers significant potential to enhance security and compliance. However, it is crucial to recognize that AI should not replace human judgment. A well-rounded approach that combines AI with human expertise is essential to effectively address the unique challenges and opportunities presented by this rapidly evolving industry.”
The panel discussion also touched on the importance of international collaboration and regulatory certainty in fostering a conducive environment for the development and adoption of AI-powered virtual asset solutions. As the virtual asset industry continues to evolve, AI is poised to play a pivotal role in safeguarding its integrity and promoting responsible innovation. By leveraging the power of AI, regulators and industry players can create a more secure, efficient, and transparent ecosystem for virtual assets.