Dubai provides more details on crypto legislation

With the Virtual Asset Exchange license issued by Dubai’s newly established crypto-regulatory authority VARA, companies can conduct their regional business from Dubai within a secure regulatory framework subject to comprehensive laws and internationally applicable policy frameworks.

Dubai's crypto legislation

Regulatory framework for crypto companies

In March this year, FTX and Binance received the cryptocurrency license in Dubai. Only shortly before, the United Arab Emirates UAE had announced that they wanted to become the world’s leading crypto hub.

Sheikh Mohammed Bin Rashid Al Maktoum is the Deputy Governor of Dubai and the Deputy Prime Minister, Minister of Finance and President of the Dubai International Financial Center. He has approved a three-year plan to drive digital transformation in Dubai using advanced technologies.

The new Dubai crypto law, with which the sheikh wants to expand the emirate to the world’s leading crypto hub, is also part of this plan.

Sheikh Mohammed bin Rashid Al Maktoum
HH Sheikh Mohammed Bin Rashid Al Maktoum Copyright World Economic Forum (www.weforum.org) / Photo by Norbert Schiller

Dubai’s crypto law provides security

Dubai is the first city in the Middle East to formulate particularly progressive legislation for cryptocurrencies. And thus acts as a link between less advanced countries, where citizens can not easily invest in cryptocurrencies.

The first details of the new Dubai encryption law were already known in March this year. Virtual assets are embedded in an advanced regulatory framework.

The burgeoning market for virtual assets will be defined by new industry standards and is expected to further strengthen the emirate’s public status in the crypto sector.

Establishment of the new supervisory authority VARA

Now the sheikh announced that the Dubai Virtual Assets Regulatory Authority (VARA) has been established and the authority will work with all related entities.

In addition, VARA has been granted economic autonomy and is affiliated with the Dubai World Trade Center Authority (DWTCA).

The recently officially presented VARA is part of the strategy of the Dubai Securities and Exchange Higher Committee. This is responsible for listing state and state-owned companies on the Dubai Financial Market (DFM).

In addition, it aims to introduce innovative financial instruments to suit the current needs of all investors.

Regulation of virtual assets

The law on the regulation of virtual assets aims to create a progressive legal framework to protect investors. In addition, the competent authority should implement international standards for the management of virtual assets.

According to this, any person in the Emirate of Dubai is prohibited from settling in the country for crypto transactions without the permission of VARA.

Targeted regulation allows modern management of any crypto business in the emirate. This makes the market competitive and provides international investors with security.

Dubai’s crypto law leaves questions unanswered

But clarification is still needed because some passages in the new crypto law are unclear. Such as the fact that VARA’s tasks overlap with those performed by the Securities and Commodities Authority (SCA) and the Central Bank of the UAE (CBUAE).

In the immediate vicinity of Dubai, namely in Abu Dhabi, there is also a comprehensive regulatory framework for activities related to virtual assets.

The relationship between the various regulators makes things complex and perhaps complicated. But the strict measures and standards to protect investors make sense. Because international guidelines include measures to combat terrorist financing and money laundering.

Binance receives the crypto license from VARA

Binance became the first company to be licensed to trade in virtual assets under Dubai’s regulation.

The trading platform can extend limited stock market products and services to pre-qualified investors and professional financial service providers.

In addition to exchange operations, Binance can anchor a blockchain technology hub at the Dubai World Trade Center. The crypto exchange wants to promote new talent and build a vibrant blockchain ecosystem.

Conclusion on Dubai Crypto Law

The new Dubai crypto law focuses on uncompromising governance and market security. VARA creates unique business models for the global crypto industry. With this, Dubai wants to emphasize its claim to be the world’s most successful crypto hub.

The authority is the symbol of Dubai’s confidence in the potential of cryptocurrencies and sees the industry as a future economic engine. The country is the first global economy to have a dedicated “Virtual Assets” regulator.

Stefanie Herrnberger works as a freelance lecturer and editor. Her many years of industry experience in Industry 4.0, digitization and blockchain provide her with the perfect backdrop for reporting on use cases of distributed ledger technology in global industry and business.

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