UAE has always been building good relationships with some regions’ crypto industry. But now, the Federal Financial Regulatory Authority of UAE seeks to offer licenses to the crypto companies that allow them to provide virtual asset services worldwide.
The Federal Financial Authority of the United Arab Emirates has stated that they are accepting license applications from businesses seeking to offer virtual asset services within the country.
It’s a great initiative UAE regulatory authorities took to bring technology into the country in a great manner. The Securities and Commodities Authority said in a press release that all virtual asset service providers have to apply to get a license from the regulator.
Despite establishing a federal regulatory framework for virtual assets in the UAE, digital asset companies operating within Dubai still need to adhere to the rules and regulations set forth by the emirate’s financial regulator, the virtual asset services authority (VARA).
These companies are also required to obtain a license from VARA. In addition, the UAE’s Cabinet recently issued resolution number 111 of 2022, which aims to create an attractive investment, economic, and financial environment for global companies and institutions operating in the virtual assets sector.
Recently, PostFinance has partnered with Sygnum Bank to offer regulated crypto services. Let us know more about it.
Key Points:
- All virtual asset service providers must apply for a license from the Securities and Commodities Authority.
- Digital asset companies operating within Dubai must comply with rules and regulations set by the emirate’s financial regulator, VARA.
- The UAE’s Cabinet issued resolution 111 of 2022 to create an attractive investment, economic, and financial environment for global companies and institutions in the virtual assets sector.
- The move by UAE regulatory authorities to allow businesses to offer virtual asset services aims to boost the country’s economy and position it as a leader in the digital asset sector.
- The licensing process for virtual asset service providers is part of the country’s efforts to ensure compliance with international standards and prevent money laundering and terrorist financing.
Virtual asset activities that require a license
On February 1, the Securities and Commodities Authority (SCA) announced that it would regulate and supervise the virtual assets sector per the cabinet resolution. The SCA stated that the resolution is intended to safeguard investors’ funds in virtual assets by preventing illegal practices.
Moreover, SCA added that these resolutions would be applicable to all the transactions related to visual assets for investment purposes, including non-financial free zones in the country. They also added some limitations, which are explained below-
“The provisions of the new federal virtual asset law do not extend to virtual assets utilized for payment purposes, as these fall under the jurisdiction of the Central Bank. Additionally, the law does not apply to financial-free zones.
On January 13, blockchain lawyer Irina Heaver based in UAE, explained the potential consequences of non-compliance with the new law to Cointelegraph. According to Heaver, failure to adhere to the law could result in financial penalties of up to 10 million AED ($2.7 million), disgorgement of profits, and criminal investigations by the public prosecutor.”
Conclusion
In conclusion, the UAE’s Federal Financial Regulatory Authority has opened license applications for virtual asset service providers, allowing them to offer virtual asset services worldwide.
This move is part of the country’s efforts to boost its economy and position itself as a leader in the digital asset sector. In addition, the licensing process is intended to ensure compliance with international standards and prevent money laundering and terrorist financing.
While the new law does not apply to virtual assets utilized for payment purposes or financial-free zones, failure to adhere to the regulations could result in significant financial penalties and criminal investigations.
Overall, this initiative taken by the UAE regulatory authorities is a positive step towards embracing technology and promoting a favorable environment for global companies and institutions operating in the virtual assets sector.
FAQs
What is a virtual asset service provider (VASP)?
A virtual asset service provider (VASP) is a company that provides virtual asset-related services, such as cryptocurrency exchanges, wallet providers, and other businesses that facilitate virtual asset transactions.
Why is the UAE’s Federal Financial Regulatory Authority offering licenses to VASPs?
The UAE aims to position itself as a leader in the digital asset sector and attract global companies and institutions operating in this field. Eventually, the licensing process ensures compliance with international standards and prevents money laundering and terrorist financing.
What do digital asset companies operating within Dubai need to do to comply with regulations?
Digital asset companies operating within Dubai must comply with rules and regulations set by the emirate’s financial regulator, known as the virtual asset services authority (VARA). Moreover, they also need to obtain a license from VARA.
What activities related to virtual assets require a license in the UAE?
The new federal virtual asset law applies to virtual asset activities related to investment purposes, including non-financial free zones in the country.
What are the potential consequences of non-compliance with the new law?
Failure to adhere to the new law could result in financial penalties of up to 10 million AED ($2.7 million), disgorgement of profits, and criminal investigations by the public prosecutor.
