Mahmoud Abuwasel, Bitcoin Regulation vs Control: Global Legal Fragmentation and Risk in Crypto Markets
Author(s): Scott Douglas Jacobsen
Publication (Outlet/Website): Vocal.Media
Publication Date (yyyy/mm/dd): 2026/05/02
Mahmoud Abuwasel is the author of UAE Crypto Litigation, the first systematic analysis of 100+ crypto court judgments from UAE courts spanning 2019–2025 — and a disputes partner at Wasel & Wasel, an international arbitration and litigation firm with offices in Washington D.C., Abu Dhabi, Melbourne, and Toronto. His practice covers international arbitration, cross-border litigation, and digital asset disputes, with experience before UAE onshore courts, the DIFC Courts, and the ADGM Courts, and in matters touching New York, England, China, Qatar, and the Netherlands. He was recently admitted and elected as a Full Member in UAE Law with The Academy of Experts (TAE), undeniably one of the most prestigious and highly respected professional bodies for expert witnesses worldwide. He has served as an expert witness on UAE law before foreign courts and tribunals, and holds degrees from Harvard University, the University of Southern Queensland, and Middlesex University.
In this interview, Scott Douglas Jacobsen speaks with Mahmoud Abuwasel on Bitcoin’s evolving legal landscape. Abuwasel distinguishes regulatory clarity from control, emphasizing clarity as a driver of innovation and stability. He outlines global divergences in Bitcoin classification, risks from ETF-driven centralization, and challenges in cross-border disputes. The discussion highlights investor vulnerability in custodial systems, tensions between AML enforcement and privacy, and the improbability of unified global regulation amid competing jurisdictional interests.
Scott Douglas Jacobsen: For Bitcoin, what do you see as the biggest legal difference between “regulatory clarity” and “regulatory control”?
Mahmoud Abuwasel: In my cross-border disputes practice as a partner at Wasel & Wasel, the distinction between “regulatory clarity” and “regulatory control” defines a jurisdiction’s market viability. Clarity provides a predictable legal architecture. The EU’s MiCA framework and the UAE’s VARA definitively map out the “rules of the road” for market participants, establishing actionable property rights and clear liability thresholds without dictating the underlying decentralized blockchain architecture. This clarity drastically reduces arbitration risks by establishing predictable contractual expectations. Conversely, regulatory control seeks to constrain or forcefully fit Bitcoin into legacy paradigms. We see this in the US’s persistent regulation-by-enforcement approach against digital assets, or in India’s punitive taxation that functions as an outright shadow ban. Clarity empowers innovation by defining how to operate legally; control stifles it by weaponizing uncertainty or imposing prohibitive barriers, predictably driving institutional and retail capital toward more accommodative regulatory hubs like Singapore or Hong Kong.
Jacobsen: Across major jurisdictions, where are the sharpest divergences in how lawmakers classify Bitcoin?
Abuwasel: The sharpest divergences lie in foundational legal taxonomy: is Bitcoin property, a commodity, or an unrecognized speculative instrument? In the UK, common law has evolved seamlessly to recognize Bitcoin as personal property. As I detailed in my book UAE Crypto Litigation, this stance is increasingly echoed in UAE courts. This property classification is crucial for successful asset tracing and executing freezing injunctions across borders. In contrast, the US remains mired in jurisdictional turf wars, primarily treating Bitcoin as a commodity under the CFTC while threatening adjacent assets with SEC securities enforcement. Singapore pragmatically regulates Bitcoin as a “digital payment token,” heavily focused on AML without broad property declarations. Meanwhile, India refuses recognition as legal tender or distinct property, opting instead for heavy taxation to discourage use. These severe taxonomic fractures create profound complexities in international arbitration, where the legal nature of the asset shifts fundamentally depending on the jurisdiction.
Jacobsen: Does the push toward ETFs recreate the concentration risks Bitcoin was designed to bypass?
Abuwasel: Undoubtedly, the global ETF boom introduces a fascinating structural paradox. Bitcoin was natively architected as a decentralized, peer-to-peer bearer asset to eliminate reliance on central points of failure. However, the approval of spot ETFs in the US and Hong Kong effectively funnels massive concentrations of underlying Bitcoin into the vaults of a few legacy mega-custodians. From a cross-border disputes perspective, this represents a profound shift. We are recreating the exact concentration vulnerabilities traditional finance suffers from. If a primary ETF custodian faces insolvency or aggressive state intervention, the blast radius would trigger unprecedented multi-jurisdictional litigation. Instead of decentralized network disputes, litigation will mirror traditional financial clashes over custodial negligence, fiduciary breaches, and insurance indemnities under New York or English law. While ETFs inject immense institutional capital and market liquidity, they fundamentally trade cryptographic resilience for centralized convenience, placing massive, concentrated trust back into the hands of intermediaries.
Jacobsen: How should courts and regulators balance AML/KYC enforcement with privacy and due process?
Abuwasel: Balancing AML mandates with privacy and due process is a delicate legal tightrope. Regulators inherently seek total visibility to combat illicit finance, evident in the EU’s strict Transfer of Funds Regulation imposing sweeping traceability, or the US Treasury’s aggressive, unprecedented sanctioning of decentralized privacy protocols. However, this dragnet surveillance risks trampling fundamental due process and individual privacy rights. In my experience testifying as an expert witness before foreign tribunals, and as a Full Member in UAE Law with The Academy of Experts (TAE), preemptive asset freezes often capture legitimate funds without immediate recourse. Jurisdictions like the UAE and Singapore attempt a more calibrated approach, mandating rigorous compliance at fiat gateways while preserving the technical realities of on-chain privacy. Courts must act as the ultimate check, demanding high evidentiary thresholds from claimants before authorizing sweeping, network-wide blockchain freezes, ensuring that AML compliance does not become a pretext for unreasonable financial surveillance.
Jacobsen: When Bitcoin is held through exchanges or institutional vehicles, who bears the legal risk in a dispute?
Abuwasel: The harsh reality exposed by recent insolvencies is that the retail investor often bears the asymmetric brunt of legal risk. When Bitcoin is custodied through centralized exchanges, the relationship is governed by opaque Terms of Service that frequently classify users as mere unsecured creditors rather than absolute owners. In the US, high-profile bankruptcy collapses demonstrated how commingled funds completely obliterate user protections, leaving depositors fighting for pennies. However, we are seeing jurisprudential shifts. In the UK and Singapore, courts are increasingly willing to impose legal trusts over digital assets held by exchanges, shielding user funds from general creditors. In the UAE, under frameworks like VARA and the ADGM, strict segregation of client assets is mandated, theoretically shifting risk back to the institutional custodian. In any cross-border dispute or arbitration, the battle lines invariably focus on whether the exchange acted as a mere bailee or assumed strict fiduciary duties over the assets.
Jacobsen: In cross-border disputes involving Bitcoin, what tends to break first?
Abuwasel: In cross-border Bitcoin disputes, the concept of lex situs, the legal location of the asset, and enforcement mechanisms invariably fracture first. Because Bitcoin exists simultaneously everywhere on a distributed ledger, determining which court possesses jurisdiction to freeze or recover the asset creates immediate procedural chaos. If a claimant in Abu Dhabi seeks to freeze Bitcoin stolen by a hacker operating in India, and the funds are routed through an exchange domiciled in the US, conflict of laws becomes a labyrinth. While English and DIFC courts have pioneered global freezing orders against unknown persons, enforcing these orders in uncooperative jurisdictions often fails in practice. Furthermore, the velocity of on-chain transactions outpaces traditional, paper-based judicial processes. By the time a London or New York court issues a legally binding injunction, the Bitcoin has already traversed multiple offshore jurisdictions and privacy mixers. The traditional legal machinery simply wasn’t built for programmable, instantly settled, borderless money.
Jacobsen: Do clearer rules make Bitcoin markets more stable?
Abuwasel: Clearer rules definitively stabilize the ecosystem, even if they cannot entirely eliminate Bitcoin’s inherent price volatility, which remains tethered to global macroeconomic factors. Legal certainty absolutely stabilizes market participation. When the EU introduced MiCA, or the UAE launched the ADGM and VARA frameworks, it established the commercial predictability required to halt institutional capital flight to offshore havens. Predictable rules eradicate the existential threat of sudden bans or retroactive enforcement; fears that have historically plagued crypto markets in India and the US. Clear rules also weed out undercapitalized or fraudulent actors who introduce systemic contagion risk. When institutions know exactly how to legally custody, margin, and trade Bitcoin under New York or English law without risking regulatory wrath, the resulting influx of strictly regulated capital creates deeper liquidity pools. Over time, this institutional depth incrementally dampens extreme market manipulation, panic selling, and localized volatility, fostering a fundamentally more resilient financial instrument.
Jacobsen: Will Bitcoin regulation converge internationally into a coherent framework?
Abuwasel: Complete international convergence into a single, coherent global framework is a regulatory pipe dream. While international standard-setting bodies are driving baseline consistencies, primarily regarding AML and KYC compliance, sovereign strategic interests will naturally dictate divergent frameworks. Based on my cross-border digital asset disputes work, I see distinct regulatory blocs crystallizing. Accommodative hubs like the UAE, Singapore, and Hong Kong are aggressively structuring bespoke, agile frameworks to attract massive global digital asset capital. The institutional bloc, comprising the EU with MiCA and the US, will ultimately integrate Bitcoin into complex traditional finance paradigms, albeit with significant friction in the US. Finally, the restrictive bloc, seen in nations prioritizing capital controls like India, will maintain heavy taxation or outright shadow bans. While cross-border enforcement will inevitably improve, the foundational laws governing Bitcoin will remain a fragmented global patchwork, making international arbitration increasingly vital to neutrally resolve disputes across these legal fault lines.
Jacobsen: Thank you very much for the opportunity and your time, Mahmoud.
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