INTRODUCTION
The United Arab Emirates (UAE) has successfully established itself as a global leader in cryptocurrency and blockchain technology. Freezones like Dubai Multi Commodities Centre (DMCC) and Dubai International Financial Centre (DIFC) offer tax benefits, funding opportunities, and clear regulatory setups, which are major attractions to virtual asset investors across the world.
REGULATIONS
The Virtual Assets market in the UAE is regulated by Cabinet Resolution No. 111 of 2022, Virtual Assets Law of Dubai (2022), Virtual Assets and Related Activities Regulations (2023), Marketing regulations for Virtual Assets (2024), and Federal Anti-Money Laundering and Financing of Terrorism Laws.
PROHIBITIONS
For any person to engage in virtual assets activities in the country should:
1. get the required approval and license from the authority;
2. have its headquarters in the country to conduct business;
3. refrain from engaging in virtual assets activities with an unlicensed business.
LICENSED ACTIVITIES
The following activities about virtual assets are subject to licensing and authority oversight:
1. Virtual Asset Platform operation and management services,
2. Exchange services between one or more forms of virtual assets,
3. Virtual Asset transfer services,
4. Brokerage services in trading operations in virtual assets,
5. Virtual Asset custody, management and control services,
6. Financial services related to offering and/or selling by the issuer to the Virtual assets, or participating in providing those services.
COMBATING FINANCIAL CRIMES
The regulations clearly state that all providers of virtual assets services in the State shall comply with the applicable legislation regarding anti-money laundering crimes, combating the financing of terrorism and illegal organizations, and the resolutions issued to implement them.
DUBAI VIRTUAL ASSETS REGULATORY AUTHORITY
The Dubai Virtual Assets Regulatory Authority (VARA) was established by the Dubai Virtual Assets Law passed in the year 2022 which regulated virtual assets and its service providers in the Emirate of Dubai.
VARA has been formed to promote the Emirate as a regional and international investment hub for Virtual assets. VARA is further responsible for developing suitable regulations related to virtual assets and protecting the investor’s interests. The regulatory framework for VARA has been laid down in the Virtual Assets and Related Activities Regulations 2023 which makes it the licensing authority in Dubai. Further, the regulations have also issued a Virtual Assets Rule book to which the Virtual Assets Service Providers must comply.
VARA functions on fundamental principles and goals which include maintaining the integrity of the Virtual Assets market, consumer protection, technological neutrality and ensuring regulatory efficiency and proportionality.
CONCLUSION
While governments across the world have been wary of the growing trade in virtual assets, the UAE government has been at the forefront of attracting individuals and entities to set up their virtual assets business in the country. The UAE government has through these regulations showcased itself as a country with progressive legislation aimed at regulating and not banning newer technology and being resilient to changes in the technological world.
For more information, you may contact:
Thomas Paoletti
Francesca Romana Valeri
Fauzia Khan
