Dubai Establishes Virtual Assets Regulator and Announces New Cryptocurrency Law

Dubai Establishes Virtual Assets Regulator and Announces New Cryptocurrency Law

Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai in the United Arab Emirates who holds various positions, including prime minister, has announced a new law on virtual assets, as well as the establishment of a crypto regulator.

In a Wednesday announcement, Sheikh Al Maktoum said that he had issued a law creating a legal framework for cryptocurrencies in the Emirate of Dubai with the aim of protecting investors and “designing highly guaranteed international standards” for the governance of the industry. In addition, the ruler said that a newly formed Dubai Virtual Assets Regulatory Authority, or VARA, would have enforcement powers in the emirate’s special development zones and free zones, with the exception of the Dubai International Financial Centre.

“Passing the virtual assets law and establishing the Dubai Virtual Assets Regulatory Authority is a vital step that establishes the UAE’s position in this sector, a step that aims to help the sector grow and protect investors,” the sheikh said.

Today we passed the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the position of the UAE in this sector. The Authority will cooperate with all related entities to guarantee maximum transparency and security for investors.

According to Sheikh Al Maktoum, crypto law will require Dubai residents to register with VARA before engaging in crypto-related activities. Companies that engage in virtual asset activities must also establish a presence in Dubai. These activities include operating a cryptocurrency exchange, conducting cryptocurrency transfers, and other services related to the offering and trading of tokens.

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The announcement did not indicate which cryptocurrencies would be subject to the law, but added that VARA would classify and specify the types of virtual assets in addition to establishing rules and controls. Anyone who violates the new law could face fines or a suspended or canceled business permit. The Dubai World Trade Center Board of Directors will determine the course of action when breaches occur.

It is unclear how the legal framework will affect free zones such as the Dubai World Trade Centre, which announced in December that it planned to become a comprehensive regulatory zone for cryptocurrencies, products, operators and exchanges. The CEO of Binance, Changpeng Zhao, praise the creation of Dubai’s VARA and said regulatory clarity for cryptocurrencies was important: The crypto executive bought an apartment in the city in October 2021.

As an emirate within the United Arab Emirates, Dubai largely has its own laws and regulations, and operates several “free zones” where people can incorporate businesses and apply for business licences. For example, the Dubai Financial Services Authority acts as the financial regulator for the Dubai International Financial Center and has introduced its own framework on cryptocurrencies.

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