Dubai, which is already a popular destination for the crypto and web 3.0 community, may have done the industry a big favour. On March 9, the city adopted its first law meant to regulate the operations of cryptocurrencies and digital assets, like non-fungible tokens (NFTs). The same was confirmed via a tweet from Sheikh Mohammed bin Rashid Al Maktoum, the prime minister of the United Arab Emirates (UAE).
“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,” Maktoum said in his tweet.
What are Dubai’s plans?
Under the new law, the UAE wants to establish a Dubai Virtual Assets Regulatory Authority (VARA), which would be tasked with regulating these assets. The VARA is also supposed to be an independent authority under the Dubai World Trade Centre Authority, which will oversee the regulation, governance, and licensing of cryptocurrencies, NFTs, and other virtual assets.
The VARA’s main responsibilities include regulating the issuance of new crypto tokens, supervising and controlling the trading of virtual assets, ensuring that high standards of protection are in place, monitoring transactions, and more. The transfer of virtual assets, management services, exchange services, operating virtual assets platforms, and virtual asset custody is also under the VARA’s domain.
Further, the new law prohibits anyone from engaging in crypto-related activities without the Dubai VARA’s authorization. In addition, people who want to deal in virtual assets will have to establish a presence in Dubai.
Maktoum said that the country wants to establish Dubai as a “key player in designing the future of virtual assets globally”.
UAE is a federation of seven emirates and the financial powerhouse of the region, Dubai, has been pushing for the development of virtual asset regulation in order to attract new types of industry as regional economic competition intensifies.
The Dubai Virtual Asset Regulation Law aspires to establish Dubai and the UAE as regional and worldwide destinations for the virtual asset industry, according to a statement broadcast by state media.
The regulatory authority, The Dubai Virtual Assets Regulatory Authority (VARA) would oversee the growth of the virtual asset business environment in terms of regulation, licencing, and governance.
The residents of Dubai would be required to register with VARA before engaging in crypto-related activities under the new law. Virtual asset-related businesses would also need to register. These businesses include cryptocurrency exchanges, businesses facilitating cryptocurrency transfers, etc.
The new law will apply throughout Dubai, with the exception of the government-owned DIFC financial free zone. The Dubai Financial Services Authority (DFSA), the DIFC’s regulator, is developing its own regulations for the virtual asset market.
Meanwhile, the notification did not clarify which crypto assets would be included by the new rule.
Dubai adopts first virtual asset law
The United Arab Emirates has been pushing to adopt virtual asset regulations to attract new forms of business and establish itself as a regional economic hub. Virtual assets refer to any products related to the blockchain technology, including cryptocurrencies, altcoins, and NFTs but the official announcement doesn’t specify which virtual assets will be regulated.
The new law will be effective throughout Dubai except for the state-owned financial free zone, DIFC, which is reportedly working on its own regulation regarding the virtual asset market.
Dubai has been gaining ground with the crypto community
The country is already favoured by many in the web3 community. In December last year, the Dubai Media Office said that the Dubai World Trade Centre would officially become a crypto zone, from where all companies operating cryptocurrencies and virtual assets can operate. At the time, a statement from the city’s media office said it would establish “rigorous standards” for investor protection and prevent money laundering.
In 2021, a crypto-based relief fund in India was routed through entities in Dubai since regulations in the UAE are more favourable for such conversions.