Dubai Introduces ‘VARA’ for Inclusive Development of Virtual Assets
Rajath R
- at Commercial
- on Mar 10, 2022 - 00:22
- on Updated: Mar 10, 2022 - 12:09
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:
- To suspend the permit for a period not exceeding six months
- Cancel the permit
- Coordinate with the competent commercial licensing authority in the Emirate to cancel the commercial license.
VARA’s Areas of Regulation:
- Keeping track of digital transactions
- Ensuring the security of users' and beneficiaries' personal information
- Regulating and supervising platforms that provide cryptocurrencies and digital wallets
- Preventing the manipulation or alteration of virtual asset prices
- Virtual asset service providers to be controlled and licenced
- Governing the release of NFTS and virtual asset
- Management and operation of virtual assets
- Providing permits and maintaining supervision of virtual asset activities
- Cryptocurrency and virtual asset exchange services
- Services for exchanging one or more types of virtual assets
- Virtual asset storage and management services
- Virtual asset transfer services
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.
For any legal queries or information, contact info@thelawreporters.com or call us on +971547928720
Popular Posts
Related News
UAE Leads Rankings of Global Entrepreneurship Index 2022
- at Commercial
The UAE has been ranked first in the world by the Global Entrepreneurship Monitor (GEM) in its Global Entrepreneurship Index 2022, which was released this week. To achieve this feat, the UAE moved three spots from fourth place in last year's survey, outperforming other prominent global economies analysed in the report. With a score of 6.8, the UAE came out on top in the overall rating of the index....
- By, Sunil Ambalavelil
- Share
Dubai’s VARA Grants Operation License to Binance
- at Commercial
Binance, the world's largest cryptocurrency exchange, announced that it has been granted a licence to operate in Dubai. It is to be noted that the Virtual Asset Regulatory Authority (VARA) was introduced in Dubai last week. The Authority is the new regulatory body that is part of the Dubai World Trade Center Authority. It will protect users' personal information and keep track of digital transactions....
- By, Sunil Ambalavelil
- Share
Procedure Of Corporate Restructuring In The UAE
- at Commercial
The process of reorganizing a company's legal, proprietary, operational, or other structures for better commercial results is known as company restructuring. The grounds for a reorganization may be financial, technical, or organizational to reduce liabilities, improve financial performance, leverage technology knowledge, better protect shareholders' interests, or streamline management. Laws related...
- By, Sankalp Surana
- Share
New Execution Law in Civil & Commercial Matters Announced...
- at Commercial
New Execution Law in Civil & Commercial Matters Announced in Bahrain The recent announcement made by the Vice President of Bahrain’s Supreme Judicial Council and President of the Court of Cassation declared that the Execution Law in Civil and Commercial Matters will be implemented on 17 March 2022. As per the New Execution Law, the judicial system will be developed while improving the effective...
- By, Sunil Ambalavelil
- Share
Can businessmen force partners to buy shares in the UAE?
- at Commercial
Question 1. I am a partner in a company. Currently, I am in dispute with my partners. Due to the dispute, I wished to leave the company and asked the partners to buy my shares. However, the partners asked me to search for a buyer from outside the company, as they were unable to buy my share and I, on my part, did not get any buyer. I want to leave the country. My question is, do I have the right to...
- By, Sunil Ambalavelil
- Share
A Comparative Study Between the Old and New Company Law
- at Commercial
To commemorate the UAE's 50th anniversary, the country has enacted a series of important legislative amendments aimed at consolidating the country's status as a global trade and economic centre. Federal Law No. 2 of 2015 or the Old Law is now repealed and replaced by the New Law, which was updated in 2020 by Decree No. 26 of 2020 ("2020 Amendment"). The 2020 Amendment aimed to improve the regulation...
- By, Sunil Ambalavelil
- Share