This article provides information on rules relating to virtual assets and how it applies to your business
As pioneers in the business world, Dubai has established a robust legal framework for businesses in the virtual assets arena. In 2022, Dubai issued the Virtual Assets Law (VAL) and established the Dubai Virtual Assets Regulatory Authority (VARA).
Virtual assets mean a digital representation of value that can be digitally traded or transferred and used for payment. These include non-fungible tokens (NFTs) and cryptocurrencies.
VARA is mandated to approve activities relating to virtual assets in Dubai (including all free zones) apart from the Dubai International Financial Centre (DIFC). The DIFC is separately supervised by the Dubai Financial Services Authority (DFSA), which has its own virtual assets regulations.
Why is Regulation Necessary for Virtual Assets & Businesses?
Regulations enable the emerging virtual asset industry to develop responsibly, resulting in a more stable marketplace for stakeholders. In addition, increased regulation protects investors by reducing the levels of fraudulent activity within the virtual asset ecosystem.
What Does the New Law Mean for Companies in Dubai?
The UAE has quickly become one of the major crypto hubs in the GCC region, and Dubai’s law will attract more new businesses operating in this space from around the world. Businesses, investors, and consumers don’t like uncertainty, and the VAL clearly delineates what requires regulatory approval.
Under the VAL, VARA’s authorization is needed to engage in the following activities in Dubai:
- offering and trading of virtual tokens
- operating and managing virtual assets platforms
- exchange services between virtual assets and fiat currencies
- virtual asset transfer service provision
- virtual asset management services
- virtual asset portfolio management services
Virtual Assets Services in Dubai
In short, the new VAL explicitly asserts that any provider that offers virtual asset services to consumers and businesses in Dubai can only do so if it has permission from VARA and a valid business license. Furthermore, VARA will be responsible for enforcing the VAL in Dubai and has enforcement powers for any infringements of the VAL, including the ability to issue sanctions and fines.
While many country regulators have hesitated to tackle the regulatory challenges that virtual assets present, Dubai is meeting those challenges head-on.
How Can We Support Virtual Asset Business Licensing?
The virtual assets space is relatively new and navigating the regulatory space can be challenging for most people. Expert advice from consultants with experience within this space can ensure that you are on the right track for your business venture. Our consultants will guide you to the best solution based on your long-term business plans.