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United Arab Emirates announced approval of First Law to regulate virtual assets

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Indrani bose Follow

INDIA

Mar, 11 2022

Mar, 11 2022

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Recently, this week, the ruler of Dubai who is also Vice President and prime minister of the United Arab Emirates (UAE), His Highness Sheikh Mohammed bin Rashid Al Maktoum, announced that Dubai has approved the first of its kind of law in the emirate that regulates virtual assets. He also revealed that Dubai Virtual Assets Regulatory Authority (VARA) has been established.

Approving the virtual asset law and establishing the Dubai Virtual Asset Regulatory Authority (VARA) is an important step that establishes United Arab Emirates UAE’s position in this sector as this helps the sector to protect investors. As per the announcement, VARA is responsible for regulating the trading and issuance of “virtual assets and virtual tokens.” It is also authorizing and regulating virtual asset service providers (VASPs).

In adopting this law, Dubai hopes to play a central role in designing the future of virtual assets and promoting responsible business growth. As Sheikh Mohammed said in a statement that to protect investors and provide international standards for virtual asset industry governance that will promote responsible business growth in the emirate, there was a need to set up an advanced legal framework. This can be done through Dubai Virtual Asset Regulation Law. In an official Twitter account, he said “We established an independent authority to oversee the development of the best business environment in the world for the virtual assets in terms of regulation, licensing, governance and in line with local and global financial systems,”. United Arab Emirates (UAE) is the federation of seven emirates.

To attract new businesses UAE is focussing to develop crypto regulations. Security and Commodity Authority (SCA), the UAE's securities regulator, said Tuesday the country is moving toward establishing its own crypto asset regulatory framework.

According to Sheikh Mohammed in the field of virtual assets, Dubai has all the capabilities that qualify it as one of the most important international centers, its advanced legislative environment. He said, "Dubai will provide the most advanced virtual asset ecosystem in terms of organization, governance, and security.” Sheikh Mohammed previously held the positions of head of Dubai Police and Public security, along with the minister of defense.

About VARA

The VARA or Dubai Virtual Assets Regulatory Authority is an affiliate body of the Dubai World Trade Centre. This body will supervise and regulate the regulations and disclosures. In emirate, exchange services between one or more forms of virtual assets including future growth of virtual assets will be monitored and regulated by the authority. Issuing licenses to virtual asset service providers and the highest standard of protection for the personal data of beneficiaries will be performed by this body.

In addition, the law mandates that the authority is responsible for establishing and enforcing the rules and controls that govern virtual asset transactions. This includes management services, clearing and settlement services, along classifying and specifying types of virtual assets. Furthermore, companies that provide crypto transfer, custody, and management services are regulated by the new law. The platforms that offer crypto trading exchange between cryptocurrencies and fiat currencies and between one or more cryptocurrencies need to go through VARA authorization and regulation. 

Except for the state-owned financial free zone DIFC, this new law is applicable throughout Dubai. DIFC’s regulator is Dubai Financial Services Authority (DFSA) which is working on its own cryptocurrency regulation.

VARA authorization monitors various activities which include Operating and managing virtual assets platforms services; Exchange services between virtual assets and currencies, whether national or foreign; Virtual asset transfer services; Virtual asset custody and management services; Services related to the virtual asset portfolio; Services related to the offering and trading of virtual tokens. In order to conduct virtual asset activities in Dubai, one must establish a physical presence.

 


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Indrani bose

CBW - External Analyst

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