Dubai Announces New Crypto Law & Establishes Virtual Asset Regulator
Prime Minister and ruler of the United Arab Emirates, Sheikh Mohammed bin Rashid Al Maktoum, has announced a new law on virtual assets as well as the establishment of a crypto regulator.
In a Wednesday announcement, Sheikh Al Maktoum said that he had issued a law creating a legal framework for crypto in the Emirate of Dubai. The law will aim at protecting investors and designing much-warranted international standards for industry governance. In addition, the ruler also said a newly formed Dubai Virtual Asset Regulatory Authority or VARA would have enforcement powers in the Emirate’s special development and free zones with the exception of the Dubai International Financial Centre.
The Sheikh said “Approving the virtual asset law and establishing the Dubai Virtual Asset Regulatory Authority is a vital step that establishes the UAE’s position in this sector, a step that aims to help the sector to grow and protect investors”.
“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.”- Sheikh Mohammed bin Rashid Al Maktoum
According to Sheikh Al Maktoum, the crypto law will require Dubai residents to register with VARA prior to engaging in crypto-related activities. Businesses dealing with virtual asset activities also needs to establish a presence in Dubai. These activities include operating a crypto exchange, conducting transfers of cryptocurrencies and other services related to offering and trading tokens.
The announcement did not state which cryptocurrencies would fall under the law. VARA would classify and specify the types of virtual assets in addition to setting rules and controls. Anyone who will violate the new law could face fines or may have their business permit suspended or cancelled. The board of directors of the Dubai World Trade Centre will determine the course of action when violations will occur.
It’s unclear how the legal framework will impact free zones like the Dubai World Trade Centre. The Dubai World Trade Centre announced in December that it is planning to become a comprehensive zone and regulator of crypto, products, operators and exchanges. Binance CEO Changpeng Zhao said that the creation of Dubai’s VARA will give clarity on cryptocurrencies and it was important.
Dubai largely has its own laws and regulations, as an Emirate within the UAE. It operates several “free zones” where people can incorporate companies and apply for trade licenses. Like, Dubai Financial Services Authority acts as the financial regulator for the Dubai International Financial Centre. It has introduced its own framework on crypto.