The Vice President and Prime Minister of the UAE and Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum has approved a first-of-its-kind law in Dubai to govern virtual assets.
Virtual assets including Non-Fungible Tokens (NFTs) and cryptocurrencies now have their own independent body to manage their regulation, licensing, and governance.
The Dubai Virtual Assets Regulatory Authority (VARA) is the new regulatory body which is part of the Dubai World Trade Center Authority. It will protect users' personal information and keep track of digital transactions.
Dubai Virtual Assets Regulatory Authority
WAM reported that under the law, the provisions of which are applicable throughout the Emirate, including special development zones and free zones, the Dubai Virtual Asset Regulatory Authority (VARA) shall be established. The authority has legal personality and financial autonomy and will be linked to the Dubai World Trade Centre Authority (DWTCA).
The Dubai Virtual Asset Regulatory Authority will be responsible for licensing and regulating the sector across Dubai Mainland and Free Zone territories (exclusive of DIFC).
Dubai Virtual Asset Regulation Law
The law, which comes into force from the date of its publication in the Official Gazette, defines the tasks and competencies of the Authority to regulate, supervise and control virtual asset services.
The law also stipulates that the authority is mandated with organising and setting the rules and controls that govern the conduct of virtual asset activities, including management services, clearing and settlement services, in addition to classifying and specifying types of virtual assets.
According to the law, it is prohibited for any person in the Emirate to engage in activities without VARA authorisation. The person wishing to practice any of the virtual asset activities must establish a presence in Dubai to conduct business.
The law defines the activities subject to VARA authorisation as follows:
- Operating and managing virtual assets platforms services
- Exchange services between virtual assets and currencies, whether national or foreign
- Exchange services between one or more forms of virtual assets
- Virtual asset transfer services
- Virtual asset custody and management services
- Services related to the virtual asset portfolio
- Services related to the offering and trading of virtual tokens
The acts that constitute a violation of the provisions of this law and its related decisions, and the fines imposed on a violator, shall be determined by a decision issued by the board of directors of the Dubai World Trade Centre.
In addition to the penalty of a fine, the VARA may take any of the following measures against the violator:
VARA’s Areas of Regulation:
Thoughts from the Leaders
Sheikh Mohammed bin Rashid confirmed that Dubai will be a key player in designing the future of virtual assets in the world.
Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the UAE’s position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors. pic.twitter.com/LuNtuIW8FM
— HH Sheikh Mohammed (@HHShkMohd) March 9, 2022
"Today, we are participating in designing the future of virtual assets globally," he said, noting that Dubai possesses all the capabilities that qualify it to be one of the most important global centres in the field of virtual assets, especially with the advanced legislative environment.
"Dubai will provide the most advanced virtual asset ecosystem in terms of organisation, governance and security”, WAM quoted Sheikh Mohammed bin Rashid.
"Approving the virtual asset law and establishing the Dubai Virtual Asset Regulatory Authority is a vital step that establishes the UAE’s position in this sector a step that aims to help the sector to grow and protect investors," Sheikh Mohammed bin Rashid added.
The establishment of the Dubai Virtual Asset Regulatory Authority comes as a part of the strategy of the Dubai Securities and Exchange Higher Committee.
Helal Saeed Al Marri, Director-General of DWTCA, said that the new law and establishing the Authority will enhance the UAE and Dubai’s position in the virtual asset sector and attract virtual asset leaders from all over the world.
He added that Dubai Virtual Asset Regulatory Authority will provide a full range of VA services in coordination with the Central Bank of the UAE and the Securities and Commodities Authority.
Conclusion
As most of the world moves towards a virtual asset friendly regulation, the UAE has taken a strong stand. By dedicating a law and regulatory authority, Dubai is now, not only future ready but also an exemplary state for other countries that need fool-proof regulations on virtual assets.
With all the regulations backed by well researched laws, Dubai has the regulatory framework set-up for safe investments and a protected environment for trade of virtual assets.
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