The introduction of the 2023 rules for cryptocurrency regulation by the Virtual Assets Regulatory Authority (VARA) on Wednesday gave the Dubai government’s stated ambition to become a financial technology hub a boost. According to the regulatory body, any Emirate organization that issues virtual assets must adhere to the rules, starting with requesting a license to conduct business in Dubai.
The new regulations, according to the agency, are meant to increase Dubai’s competitiveness both domestically and abroad by attracting cryptocurrency enterprises, safeguarding investors and dealers in digital assets, and putting a stop to unlawful activities.
The goal is to “position the Emirate as the capital of the future economy anchored by metaverse, AI, Web3.0, and blockchain,” according to Helal Saeed Almarri, Director General of Dubai’s Department of Economy & Tourism and Chairman of VARA’s Executive Board.
As the “sole independent and specialized regulator for Virtual Assets in the world to serve as the accelerator for a fully borderless Digital Economy,” he referred to VARS.
This specially created structure underlines Dubai’s confidence in creating a dynamic VA ecosystem that fosters next-generation innovation, as well as the UAE’s dedication to developing appropriate safeguards, the official continued.
The Dubai Department of Economic Development moved its services to a blockchain-based registry on the Dubai Pulse blockchain platform as part of Dubai’s foray into the blockchain field in 2019.
Several blockchain businesses, including Binance and the defunct cryptocurrency exchange FTX, have requested and been granted licenses to operate inside the Emirate. Binance and the Dubai World Trade Centre Authority inked a contract in December 2021 with the intention of creating a hub that would facilitate the licensing of additional blockchain-related businesses in Dubai.
Coinbase, Huobi, and Kraken are additional cryptocurrency exchanges running in Dubai.
The new regulation states that any organization intending to conduct business utilizing cryptocurrencies must request permission from the regulatory body and obtain a license before providing their services.
The rulebook states that a license may be canceled for a number of reasons, including failing to pay a judgment rendered by a court inside or outside the United Arab Emirates, insolvency, becoming the subject of insolvency proceedings, or materially violating any law, regulation, rule, or directive.
Additionally, VARA made it clear that the new money laundering laws forbid insider trading, illegal disclosure, and market manipulation in addition to financing terrorism and other illegal organizations.
There are several exemptions listed in the rulebook, such as a professional exemption for “duly registered” working accountants, lawyers, or “other professionally licensed business advisors who engage in any virtual asset activity totally incidental to their professional practice.”
Professionals who want to maintain these exemptions must continue to hold the proper authorization to practice in the Emirate from a recognized professional body and carry the necessary professional indemnity insurance.
According to VARA, breaking these laws could lead to fines, civil penalties, and “other enforcement actions” being taken against the responsible parties.
