Dubai establishes virtual asset regulator and announces new crypto law

Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai in the United Arab Emirates who holds various positions including prime minister, has announced a new virtual asset law as well as the creation of a crypto regulator.

In an announcement on Wednesday, Sheikh Al Maktoum . said said he had enacted a law that created a legal framework for crypto in the emirate of Dubai, aimed at protecting investors and “designing justified international standards” for the governance of the sector. In addition, the ruler said a newly formed Dubai Virtual Asset Regulatory Authority, or VARA, would have enforcement powers in the emirate’s Special Development Zones and Free Zones, with the exception of the Dubai International Financial Centre.

“The adoption of the Virtual Asset Act and the establishment of the Dubai Virtual Asset Regulatory Authority is an essential step that establishes the UAE’s position in this sector, one that aims to help the sector grow and protect investors,” it said. the sheikh.

According to Sheikh Al Maktoum, the crypto law requires Dubai residents to register with the VARA before engaging in any crypto-related activities. Companies engaged in virtual asset business are also required to establish themselves in Dubai. These activities include operating a crypto exchange, performing transfers of cryptocurrencies and other services related to the offering and trading of tokens.

The announcement did not specify which cryptocurrencies would be covered by the law, but added that in addition to establishing rules and controls, VARA would classify and specify the types of virtual assets. Anyone caught violating the new law could face fines or a suspended or revoked business license. The board of directors of the Dubai World Trade Center will determine what to do in the event of violations.

Related: Crypto City: Guide To Dubai

It is unclear how the legal framework will affect free zones like the Dubai World Trade Center, which announced in December that it plans to become a comprehensive zone and regulator of crypto, products, operators and exchanges. Binance CEO Changpeng Zhao praised the creation of Dubai’s VARA, which says regulatory clarity for cryptocurrencies was important – the crypto exec bought an apartment in the city in October 2021.

As an emirate within the UAE, Dubai largely has its own laws and regulations, with several ‘free zones’ where people can set up companies and apply for trade permits. For example, the Dubai Financial Services Authority acts as the financial regulator for the Dubai International Financial Center and has put in place its own framework for crypto.

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