This article highlights how you can take advantage of Dubai’s Virtual Asset Law (VAL) under the new Dubai Virtual Assets Regulatory Authority (VARA).
Understand the basics
Virtual asset entrepreneurs who seek a supportive environment for innovation, where they can swiftly develop ideas into products, are drifting toward jurisdictions with legal frameworks designed for their rapidly growing industry.
Virtual asset startups look for tech-savvy jurisdictions that can cater to their needs to receive efficient licensing, registration, and asset protection. Equally, investors in virtual assets seek regulatory assurance to protect their interests.
Some of the benefits of virtual assets, such as their ability to transfer value rapidly around the globe outside traditional banks, have attracted some nefarious actors with ill intent. Money launderers, cyber criminals, and the implosion of major crypto houses of exchange have rattled markets and investors in recent years. As a result, the world is slowly moving towards regulating virtual assets.
Dubai issued a law called Dubai Virtual Assets Law (also known as Law No. 4 of 2022) to regulate the virtual asset industry in the Emirate. This law applies to free zones and special development zones. The only exception to the rule is DIFC which has its regulations regarding virtual assets.
As per Article 2 of the law, virtual assets are defined as “a digital representation of value that can be digitally traded, transferred, used as an exchange, payment toll, or for investment purposes.” This includes cryptocurrency, non-fungible tokens (NFTs), and other digital representations of value determined by the Dubai Virtual Assets Regulatory Authority (VARA).
What is Dubai Virtual Assets Regulatory Authority (VARA), and what is its role?
VARA is the legal authority and regulator that develops policies and oversees virtual asset services in the Emirate. For example, providing permits to virtual assets service providers will fall within its purview.
VARA is authorized to oversee whether service providers are fulfilling requirements within the law, protecting personal data along guidelines established by the Dubai Digital Authority, and dealing with virtual assets services grievances promptly and responsibly.
In short, VARA gives confidence to startups, entrepreneurs, inventors, and investors by ensuring that activities within its purview are above board.
Do You Need a Permit to Conduct Business with Virtual Assets?
As per Article 16 of the law, the following activities require permits and are subject to oversight by VARA:
- provision of Virtual Asset Platform operation and management services
- provision of services for the exchange between Virtual Assets and national or foreign currencies
- provision of services for the exchange between one or more forms of Virtual Assets
- provision of Virtual Asset transfer services
- provision of Virtual Asset safekeeping, management, or control services
- provision of services related to Virtual Asset Wallets
- provision of services related to the offering, and trading of Virtual Tokens
VARA reserves the right to add additional services and platforms to its purview as technology evolves, and new developments occur within the sector.
How Can You Benefit from Dubai VAL and VARA?
In brief, the introduction of the Virtual Asset Law is a positive step in Dubai’s dream to be the global focal point for virtual assets and cutting-edge technology. Businesses can take advantage of the virtual asset regime and set up with confidence in Dubai’s booming emerging digital technology market.
International institutional investors, who seek transparency and protection through regulations, invest in well-regulated markets. Regulatory confidence makes it easier for new firms to seek financing and establish local banking relationships, while retail investors are more confident when government oversight exists.
To expand the use of virtual assets, the Dubai Multi Commodities Centre (DMCC) has a Crypto Centre for companies developing crypto and blockchain technologies. DMCC houses businesses offering, issuing, listing, and trading virtual assets, as well as those developing blockchain trading platforms, fully supported by the Dubai government. The Crypto Centre is home to the region’s largest group of crypto and blockchain companies.
Are You Ready to Launch Your Virtual Asset Business in Dubai?
Our consultants can help you get a virtual asset business license in Dubai in as little as a few days or weeks. We have the expertise and relationships with various jurisdictions across Dubai that offer virtual asset business licenses. Additionally, we can connect you with banks to open a bank account in Dubai and financial institutions that work well within this sector. So whether you are a small startup or a global player within the sector, we can help you launch your venture in Dubai!
Don’t forget to try our Cost Calculator to get an estimate for your business setup in Dubai.