Dubai Issues First Law Regulating Digital Assets
Over the past few years, Dubai has taken significant strides to position its economy as innovative, forward-thinking, and ready to embrace new technology. This has led to the creation of various tech-centric free zones, business set up policies, and regulations for virtual assets.
In its latest milestone towards embracing digital innovation, the Emirate of Dubai has officially issued its first law regarding crypto assets.
This all began in September 2021, when the Securities and Commodities Authority (SCA) and the Dubai World Trade Centre Authority (DWTCA), entered a memorandum of understanding (MOU) in favor of regulation, issuance, trading, and listing of crypto assets within the free zone.
Shortly after, the DWTCA announced its plans with Binance, a major cryptocurrency exchange platform, to create a new industry hub focusing on global digital assets in the Emirates.
Now, Dubai has issued its first crypto law and formed a regulatory body for virtual assets, such as cryptocurrency tokens.
The newly established Dubai Virtual Assets Regulatory Authority will be responsible for promoting security and transparency for crypto investors.
Moreover, as of February 28th, 2022, the government has issued Dubai Law No. 4 of 2022, known as the “Dubai Virtual Assets Law”.
Here are the key points from this new law:
- The DVAL will become effective on its publication in the Official Gazette.
- Dubai Virtual Assets Regulatory Authority (VARA) will be the entity responsible for granting the authorization of digital assets in Dubai
- The scope of this law covers only the Emirate of Dubai, as well free zones apart from the Dubai International Financial Centre
- DVAL will not regulate services related to virtual assets on a federal level
- To participate in the trading of cryptocurrencies, an individual must seek authorization from VARA, must operate in the Emirate of Dubai, and obtain a trade licence from the relevant commercial authority in Dubai
- Penalties for those who act against the law include fines, cancellation, or withdrawal of permit, and possibly the cancellation of their commercial license
- Implementing decisions will be issued by the VARA on the implementation of the DVAL, including description of activities, exempted virtual assets, procedures for licensing and associated fees and charges
Moreover, the defined virtual asset activities, subject to VERA authorization, are as follows:
- Operating and managing virtual assets platforms services
- Exchange services between virtual assets and currencies, 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
- Services related to the offering and trading of virtual tokens
In regards to this virtual assets regulatory law, Sheikh Mohammed bin Rashid Al Maktoum, the Ruler of the Emirate of Dubai issued the following statement via Twitter:
“Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the UAE’s position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors.”
HH Sheikh Mohammed (@HHShkMohd) March 9, 2022
This is truly a revolutionary law for the Emirates and a step towards common acceptance of virtual assets. This news comes as other major countries are contemplating their own policies and acceptances of cryptocurrency.
