UAE has taken a step forward in legalizing cryptocurrencies and NFTs in UAE after the announcement of issuing crypto licenses. On March 9, 2022, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Ruler of Dubai, the Prime Minister, and Vice President of UAE passed the first law to adopt and regulate virtual assets.
According to various reports, he said in a tweet on Twitter, “The future belongs to those who design it. Through the virtual asset law, we aspire to participate in shaping the future of this ever-evolving sector”.
Dubai Virtual Asset Regulatory Authority (VARA) will be set up under Dubai World Trade Center Authority. This new regulatory agency will oversee Dubai’s unique digital currency legislation.
His Highness stated that this law is a crucial step and an advanced framework that targets to protect the rights of investors and advance the digital sector, saying that “Dubai will provide the most advanced virtual asset ecosystem in terms of organization, governance, and security.”
Virtual assets include non-fungible tokens (NFTs) and digital currencies such as Bitcoin.
“Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the UAE’s position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors,” he stated on Twitter.
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Dubai Virtual Asset Regulation Law
The virtual asset regulation law will be applicable to free zones and special development zones, except for the DIFC, throughout the UAE. The adoption of this law by the Emirate will boost sustainable business growth within a virtual asset Industry governance that adheres to the best international standards.
The establishment of the Dubai Virtual Assets Regulatory Authority is a huge step to enter the UAE into the world of virtual currencies. VARA is also accountable for regulating and licensing the sector across Free Zone territories and Mainland zones of Dubai (except Dubai International Financial Center).
Virtual Asset Regulatory Authority (VARA)
The main responsibilities of VARA are:
- Prohibiting the modification or manipulation of digital assets’ prices
- Regulating the release and issuance of NFTs and digital assets
- Overseeing and supervising virtual transactions
- Licensing and regulating digital assets service providers
- Observing and regulating the digital platforms providing cryptocurrencies and virtual wallets
- Safeguarding personal data of beneficiaries and users
VARA is authorized to conduct the following activities:
- Offering services associated with the providing and trading of virtual tokens
- Managing and functioning services of digital assets platforms
- Offering exchange services between currencies and virtual assets, whether foreign or national
- Offering exchange services between one or more forms of digital assets
- Providing virtual asset transfer services
- Providing Virtual asset management and custody services
- Offering services linked with the virtual asset portfolio
The acts that cause a violation of the provisions of the crypto law and decisions related to it, and the fines or charges imposed on the violator, would be agreed upon by a mutual decision made by the board of directors of the Dubai World Trade Center.
Other than the imposition of charges, Dubai VARA also has the authority to coordinate with the relevant commercial licensing authority in the UAE to cancel the commercial license, cancel the permit, and suspend the permit for a time of up to six months.
Crypto Law in UAE
The virtual asset law is 56 pages long, was released on the 9th of March by the Dubai Financial Services Authority (DFSA). It follows an October report on digital tokens and mainly focuses on crypto tokens.
According to the crypto law, it is prohibited for an individual in the UAE to involve in activities without authorization of Dubai VARA which is the only competent body to control, regulate, and monitor virtual asset services. Those who want to conduct VA activities need to create a presence in Dubai to do business.
The Dubai Virtual Asset Regulation Law calls for the ban of “algorithmic tokens” that manipulate supply and demand to drive price and “privacy tokens” designed to conceal trading patterns and token holders.
The law is currently in the public consultation and amendment phase. Once the final version of the law is completed, it will be made open to the public.
Crypto Business and License with Riz and Mona
As the law is approved, now it is easier than ever before to start a cryptocurrency business in Dubai. Get in touch with Riz and Mona Business Setup Consultants in UAE today to establish your crypto business in the Emirates without any hassle. Our experts will take care of the whole process from submitting the application for a crypto license to smoothly establishing your crypto business in the UAE.