Dubai Announces New Crypto Law and Regulatory Framework for 2023
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Dubai Virtual Asset Regulatory Authority (VARA) has introduced a new rulebook for digital trading assets in the city. The new virtual asset regulatory framework is set to foster growth and mitigate the potential misuse of cryptocurrencies.
VARA Rulebook: What Does This Means for Crypto Businesses?
On February 7, the Dubai government’s independent regulator, Virtual Asset Regulatory Authority (VARA), released its 2023 digital asset framework to regulate cryptocurrency. With the rulebook in place, the United Arab Emirates (UAE) hopes to become a regional hub for digital asset industry investors.
According to the regulatory authority, all active crypto exchanges that offer virtual assets to Dubai residents must comply with the rulebook, which begins with applying for an operating license in Dubai.
VARA further stated that the new framework is not designed to limit the vast growth of the crypto space. Rather, it intends to protect digital asset dealers and give clarity to potential investors, attract cryptocurrency projects and businesses, and curb money laundering, terrorist financing, and other illegal practices.
Sheikh Mohammed Bin Rashid, the Dubai ruler, hailed the development of the digital framework as a critical step in securing the growing market of virtual assets and boosting Dubai and the entire UAE’s competitive edge in the digital industry, both locally and internationally.
Virtual Assets in Dubai
The term “virtual asset” refers to a digital representation of monetary value that can be digitally bought, transferred, or used as a means of payment. These assets include cryptocurrencies or tradeable tokens such as non-fungible tokens (NFTs).
The UAE has significantly evolved in adopting new technologies like blockchain and cryptocurrency law. Therefore, it is not surprising that the Emirate of Dubai adopted a new direction in 2022 designed to clarify precisely how Dubai regulates cryptocurrency and digital assets.
The legal regulation is designed to offer regulatory certainty, enabling the market to have streamlined clarity on the expected level of operators’ responsibility in the space. This will further establish Dubai as an innovation hub for the virtual economy.
According to the framework, all operational crypto businesses and exchanges within the Emirates should apply for gold-standard risk assurance and anti-money laundering standards from licensed entities in the region.
Additionally, the VARA rulebook framework spans a comprehensive list of seven licensed asset activities, including advisory services, broker-dealer services, custodial services, exchange services, lending-borrowing services, payments, and remittances services, virtual asset management, and investment services.
All these services must be regulated under the VARA regime, as it is a step to enable investors to make a more informed decision on new crypto assets launched in Dubai and the issuer’s obligations. Any breach of the rulebook will be subject to sanction, among other disciplinary acts.
The virtual assets regulations were welcomed by prestigious financial spearheads, including Mahin Gupta, founder of the digital wallet infrastructure platform. Gupta expressed his delight at Dubai’s progress toward a more mature and transparent framework for the digital asset industry.
He further praised VARA for issuing specific activities like exchange and custody services.
Dubai’s regulations significantly show that the city and UAE have grown to become a first-choice region for global companies in the digital asset industry. The framework will further facilitate the efforts of the authorities to create a transparent, progressive regime for global crypto companies. This will help build blockchain applications to push massive mainstream adoption and stellar economic growth in the Arab region.
In addition, Helal Saeed Almari, the Chairman is VARA’s Executive Board and Director General of Dubai’s Department of Economy and Tourism, explained that the framework is part of Dubai’s economic plan to establish the Emirates as the central point of the potential digital economy which is now anchored by Web3, metaverse, artificial intelligence (AI), and blockchain.
