On 09 March 2022, Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, approved the Dubai Virtual Asset Regulation Law
The Dubai Virtual Asset Regulation Law seeks to develop an advanced regulatory framework to safeguard investors’ interests and establish international standards for virtual assets industry governance that will generate responsible business growth. In terms of the scope of application, Article 3 states that the provisions of the law should be applicable throughout the Emirate of Dubai, including special development zones and free zones, except for the Dubai International Financial Centre (DIFC).
Under the law, the Virtual Asset Regulatory Authority (VARA) is established as a competent authority to oversee virtual asset services and enhance regional and global leadership in the field through coordination with the Central Bank of the UAE (CBUAE) and the Securities and Commodities Authority (SCA). According to Article 6, the authority’s main responsibilities include regulating, licensing, and supervising virtual asset service providers and the issuance of virtual assets and tokens; setting the rules and controls for virtual asset activities; and ensuring the highest standards of protection for beneficiaries’ personal data with the Dubai Digital Authority (DDA).
It is noteworthy that Article 15 stipulates that any natural or legal person who wishes to engage in virtual asset activities should receive authorization from VARA and must establish a presence in Dubai to conduct business. Moreover, Article 16 outlines a number of activities that are subject to VARA’s authorization, which includes operating and managing virtual assets platforms services; exchange services between virtual assets and currencies, whether national or foreign; exchange services between one or more forms of virtual assets; virtual asset transfer services; virtual asset custody and management services; services related to the virtual asset portfolio; and services related to the offering and trading of virtual tokens. In case of violation of the provisions of the law, VARA is authorized to either suspend permits for up to 6 months, cancel the permit, or coordinate with the competent commercial licensing authority in Dubai to cancel the breacher’s commercial license.
Interestingly, the law was published on the same day as the US’s Executive Order on Ensuring Responsible Development of Digital Assets, which indicates the UAE’s commitment to get a head start and become a global leader . In the long run, we expect to see Dubai emerge as a virtual asset hub as the regulation has laid a solid foundation to protect all stakeholders and support the steady growth of the virtual asset market. The law will also benefit the cooperation between Binance and the Dubai World Trade Centre Authority (DWTCA) as the cryptocurrency exchange seeks to establish a new international virtual asset ecosystem in Dubai, which is expected to generate long-term economic growth through digital innovation. Besides Dubai, the UAE’s SCA has also recently announced that the federal-level authority is in the final stage of issuing the regulatory and supervisory framework for virtual assets issued for investment purposes. As a result, licensed exchanges and local competent authorities in the UAE mainland will be authorized to “apply for a license for virtual assets exchange subject to the approval and complying to all regulations and procedures of the Authority.”
Access Partnership is closely monitoring developments regarding the Dubai Virtual Asset Regulation Law. For more information regarding the Dubai Virtual Asset Regulation Law or engagement in the UAE, please contact Hussein Abul-Enein at [email protected] or Chen-Che Hsu at [email protected].
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