While many countries are inclined to simply ban the use of Bitcoin (BTC) and virtual assets, UAE regulators are taking a different approach.
The country has been constantly enacting its vision of becoming a blockchain capital by providing frameworks to guide cryptocurrency companies on how to operate in accordance with the laws..
The jurisdictions in the country are divided between the continent, where the regulator is the Securities and Commodities Authority (SCA), and the free zones, that is, geographically specified areas within the UAE with relaxed tax and regulatory regimes.
These free zones include the Dubai International Financial Center (DIFC), regulated by the Dubai Financial Services Authority (DFSA), the Abu Dhabi Global Markets (ADGM), regulated by the Financial Services Regulatory Authority (FSRA). ), and the Dubai Commodities Center (DMCC), whose regulation corresponds to the SCA.
In an interview with Cointelegraph, Kokila Alagh, founder and CEO of Karm Legal Consultants, shared a brief overview of the regulatory situation in the country. According to Alagh, the SCA, the continental regulator, provides certainty and opportunities for cryptocurrency and blockchain businesses:
“The regulations provided certainty and have opened up new opportunities in the UAE, making the SCA a progressive regulator on the global stage as they have not ignored this vital growing sector and are continually working on developing frameworks for adjust according to these emerging sectors like DLT and blockchain. ”
The FSRA, ADGM’s financial services regulator, was the first to introduce digital asset regulations in the country back in 2018. Alagh said that ADGM was also one of the first regulators globally to introduce digital securities regulations and guidance on virtual assets, adding that ADGM is “one of the most important jurisdictions for established blockchain companies.”.
Alagh also spoke about the regulations in the DIFC. According to Alagh, DFSA, the DIFC regulator, “is one of the first regulators of a major financial free zone to bring regulations regarding security tokens.”.
Current DFSA regulations cover the tokenization of securities through blockchain and distributed ledger technology, including the tokenization of stocks, derivatives, bonds, debentures, certificates or units of a fund.. However, consultation documents for stablecoins, fungible cryptocurrencies, and non-fungible tokens are still in the process of being drafted.
Lastly, Alagh pointed out the DMCC. The free zone issued special licenses, such as the DLT technology service provider license and the cryptocurrency proprietary trading license.. It also has a dedicated cryptocurrency center called Crypto Oasis, where more than 130 blockchain companies have registered.
Alagh said that “the DMCC is one of the most advanced regulators in this space and has spearheaded the development of the crypto ecosystem in the UAE.. The DMCC is a crypto-friendly regulator and provides companies with a friendly framework to establish a business. ”
Meanwhile, the cryptocurrency exchange Binance has set out to collaborate with the UAE government to help crypto exchanges and companies obtain their licenses in Dubai.. The firm signed a memorandum of understanding with the Dubai World Trade Center Authority when launching a cryptocurrency hub.
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