Dubai’s Virtual Asset Regulatory Authority (VARA), has issued new guidelines for the trading of virtual assets in the city.
The regulations set out a comprehensive virtual asset framework built on principles of economic sustainability and cross-border financial security.
VARA said its regulations will curb money laundering, terrorist financing and give clarity to potential investors.
Virtual assets in Dubai
Virtual assets can include cryptocurrencies or tradeable digital tokens, such as a NFTs.
The UAE is established as a hub for the virtual economy and is committed to addressing global risks of money laundering and terrorist financing, arising from the potential misuse of new technologies.
The virtual asset framework is designed to offer regulatory certainty – allowing the market to have greater clarity on the expected level of operator responsibility.
It also mandates gold-standard risk assurance and anti-money laundering standards to be applied by licensed entities within the Emirate.
Helal Saeed Almarri, Director General Dubai’s Department of Economy & Tourism, and Chairman of VARA’s Executive Board said: “Dubai’s D33 Economic Plan has outlined our mission to establish the Emirate as the capital of the future economy anchored by metaverse, AI, Web3.0 and blockchain.
“In Q1-2022, VARA was launched as the world’s only independent and specialist regulator for virtual assets to serve as the accelerator for a truly borderless digital economy.
“Ahead of its first anniversary since establishment, VARA launches the first-of-its-kind virtual asset framework structured to accelerate our new economy agenda, augmenting secure, and sustainable ‘global’ market growth.
“This custom-designed construct reflects UAE’s commitment to building responsible safeguards, and Dubai’s confidence in delivering a progressive VA ecosystem that nurtures next-gen innovation.”
The new regulations span a comprehensive breadth of seven licensed virtual asset: activities:
- Advisory services
- Broker-Dealer services
- Custodial services
- Exchange services
- Lending-borrowing services
- Payments and remittances services
- Virtual asset management and investment services.
Additionally, issuance is a regulated activity under the VARA regime, to allow consumers to make a more informed decision on new tokens being launched in Dubai, and the associated obligations of the issuer.
Existing MVP operational licence applicants [and holders of either the provisional or preparatory MVP licenses], legacy UAE-based Virtual Asset Service-Providers (VASPs), and new market entrants will be provided with a route towards full FMP licensing.
All VASPs offering virtual asset services to the Dubai market prior to the publication of the FMP Regulations will be required to register with VARA and become fully compliant with the final rules.
Any breach of this condition will be subject to regulatory action.
The regulations were welcomed by the crypto industry. Mahin Gupta, founder of digital wallet infrastructure platform Liminal, said: “We are delighted to see Dubai moving towards a more mature regulatory framework for the digital asset industry.
“We thank VARA for issuing separate rules for specific activities like issuance, advisory, exchange services and custody services.
“The advanced regulations significantly show that Dubai has become the first choice for global companies in the digital asset business for their global expansion.
“The latest regulatory framework will facilitate the efforts of the authorities to create a compliant and progressive regime in the Dubai for global crypto companies to build compliant blockchain applications to fuel mainstream adoption and economic growth in the region”.
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