Cryptocurrency has paved a new way for the international trade and economy. As per the current scenario there are more than 200 crypto currencies. Binance and Kraken are one such examples of it.
France has accepted of Binance as the Digital Asset Service Provider. Binance (BNB) has thus received regulatory approval to operate in France as a Digital Asset Service Provider (DASP). France has become the first European country to accept and license the operations of Binance.
Kraken is a San-Francisco based cryptocurrency exchange where market participants can trade the various cryptocurrencies. Here the participants are allowed to buy or sell the cryptocurrencies using various fiat currencies, that include U.S. dollars, Canadian dollars, euros, and the Japanese yen.
What is cryptocurrency?
It is a digital form of currency based on Blockchain technology that only exists online. Blockchain is the master public ledger that records and stores all transactions and activity. It is a tradable digital asset with encrypted data. It uses cryptography that secures its transactions. Its characteristic feature of it is that it is not issued by any central authority. It is a peer-to-peer system in which any person across the planet can have transactions. The technical foundations of cryptocurrency date back to the early 1980s. An American cryptographer, David Chaum, invented a “binding” algorithm that remains central to modern web-based encryption.
But no true cryptocurrencies emerged truly until the late 2000s when Bitcoin came onto the scene. Bitcoin is known as the first modern cryptocurrency that was publicly used as means of exchange. It was first introduced in a white paper published by Satoshi Nakamoto, a pseudonymous person or group in 2008.
Regulations dealing with cryptocurrency in the UAE-
Here below are the various regulations that govern the licensing of crypto in the UAE.
UAE blockchain strategy
The UAE introduced the UAE blockchain strategy in the year 2021 to be a trailblazer in blockchain technology, with the vision of adopting blockchain technology for 50% of government transactions by 2021.
Financial Services Regulatory Authority (FSRA)-
The Financial Services Regulatory Authority (FSRA), the financial authority for Abu Dhabi Global Markets (ADGM), is the first agency in the UAE to publish complete instructions and regulations on conducting cryptocurrency-related activities. FSRA has further provided supplemental guidelines on the regulation of Initial Coin/Token Offers and Virtual Currencies, in which it remarked on initial coin offerings (ICOs), in which cryptocurrencies are offered for general sale.
The FSRA uses the above guidelines to decide whether a suggested coin token is a security or a utility on a case-by-case basis. If the FSRA determines that the token is the security the ICO will be governed by the Financial Services and Market Regulations and if the token is a utility one the ICO will be ungoverned.
FSRA initiated a regulated activity of “running a crypto asset business” in the year 2018, through the publishing of the Regulation of Crypto Asset Activities in ADGM (ADGM regulations), which includes the operation of crypto-asset exchange houses but excludes ICO issuances.
Abu Dhabi Global Markets (ADGM) Laws
The ADGM laws focus on the obligatory requirements that are needed for carrying out the operation with the goal to encourage transparency and technology governance so that it is in compliance with anti-money laundering and counter-terrorist financing standards.
The Dubai Multi Commodities Centre (DMCC)
The Dubai Multi Commodities Centre (DMCC) has approved “proprietary trade-in crypto-commodities,” indicating that the DMCC considers cryptocurrencies as a commodity. However, enterprises in the DMCC with this license are only allowed to trade with their own funds and this license does not cover the formation of exchange houses or the conduct of initial coin offerings (ICOs). The DMCC has granted a license to a DMCC corporation making it one of the world’s first cryptocurrency deep “cold storage” vaults.
Dubai Virtual Assets Regulatory Authority (“VARA”)
In March 2022, the ruler of Dubai and Prime Minister of the UAE Sheikh Mohammed bin Rashid Al Maktoum took his Twitter to handle to announce that UAE has adopted its first law to regulate crypto assets. The law would work towards developing UAE’s and Dubai’s position as vital players in the future market of virtual assets.
On February 28, 2022, the Emirate of Dubai enacted Law No. 4 of 2022 on the Regulation of Virtual Assets (“VAL”) and established the Dubai Virtual Assets Regulatory Authority (“VARA”).
The Dubai Virtual Asset Regulation Law aspires to establish Dubai and the UAE as regional and worldwide destinations for the virtual asset industry, according to a statement broadcast by state media. Under this regulatory authority, The Dubai Virtual Assets Regulatory Authority (VARA) would look after the virtual asset business environment in terms of regulation, licensing, and governance.
VARA’s main responsibilities include: -
Issuance of new crypto tokens
Supervising and controlling the trading of virtual assets
Standardized protection and monitoring transactions
Transfer of virtual assets
Management and Exchange services
Operating virtual assets platform
The new law prohibits anyone from engaging in crypto-related activities without the Dubai VARA’s authorization. In addition, people who want to deal in virtual assets will have to establish a presence.
The authority has a legal personality and financial autonomy and is linked to the Dubai World Trade Centre Authority (DWTCA). VARA will be responsible for licensing and regulating the sector across Dubai’s mainland and the free zone territories (excluding DIFC). It will provide a full range of services in coordination with the Central Bank of UAE and the Securities and Commodities Authority. It is mandated with organizing and setting the rules and controls for conducting virtual assets-related activities including management services, clearing, and settlement services, in addition to classifying and specifying types of virtual assets.
Cryptocurrency in the global market -
Cryptocurrency has no doubt drawn the attention of the global market itself. The year 2020 when the whole world was battling the pandemic, is a significant one for cryptocurrencies and blockchain. In a period, full of extremity and economic misbalance, cryptocurrencies proved to be remarkably resilient. The major reason behind this was the accessibility of global high-speed internet and digitalization which created a favourable environment for cryptocurrencies to stabilize themselves. Bitcoin became a highly valued asset in 2020.
The year is again a significant one because of The Russia-Ukraine conflict. When Russian forces invaded Ukraine, it was thought that the markets would crash, but the crypto market stood stronger than ever. It has provided new ways to make donations which is evident from the acceptance of cryptocurrency by the Ukrainian government. Hence the emerging role of crypto has come to the forefront with a clearer image.
However, it is worth mentioning that the legal status of the crypto market varies from country to country.
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