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UAE: Cryptocurrencies and virtual assets, what do you need to know about VARA 2022 ?

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Staff Writer, TLR

Published on July 14, 2023, 17:41:00

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Binance exchange, Is Binance safe, Binance Coin, Top cyrpto Exchange, UAE, Dubai, VARA, Crypto trading, Virtual Asset Regulatory Authority, Virtual Asset, Crypto currency, Bitcoin exchange

Trying to make sense of the upcoming cryptocurrency laws in the UAE? First of all, you’re not alone in your confusion. These laws are complicated, and the name Virtual Asset Regulatory Authority doesn’t exactly roll off the tongue easily. Here’s everything you need to know about VARA and how it affects cryptocurrencies and other virtual assets in the UAE.

What is VARA?

The Virtual Asset Regulatory Authority (VARA) was established by Law No. 8 of 2018. It regulates activities related to virtual assets in the UAE and provides a comprehensive regulatory framework for investors, developers, exchanges and service providers in order to ensure consumer protection as well as the sustainable development of these activities. All relevant business entities operating in or from Dubai will be required to obtain authorization from VARA prior to commencing any regulated activity. 

This applies whether they are incorporated or located outside of Dubai. Businesses that have been granted authorization by VARA will be issued with a license that is valid throughout all emirates of the UAE, enabling them to operate across borders with greater ease than those businesses that have obtained authorization solely within their own emirate.

Legalities surrounding Crypto Currencies and Virtual Assets

The UAE has recently published a new law, as per Federal Decree No. 7 of 2018. This decree forms part of a framework called the Virtual Asset Regulatory Authority (VARA), which will be responsible for regulating cryptocurrency and virtual asset activities in UAE from 2021 to 2022. 

One of its objectives is to protect investors from fraudulent schemes that have been proliferating across various countries around the world. It also aims to protect consumers from being exposed to risks related to virtual asset trading platforms, such as money laundering and terrorist financing. The Virtual Asset Regulatory Authority is one of several measures taken by Abu Dhabi Global Market (ADGM), a financial free zone in Abu Dhabi, the United Arab Emirates that supports innovation within financial services and technology through regulatory initiatives and strategic partnerships with leading industry players. ADGM was formed by merging two existing entities; the Financial Services Regulatory Authority (FSRA) and Securities & Commodities Authority (SCA). The Virtual Asset Regulatory Authority will regulate virtual asset service providers operating in ADGM’s territory and ensure compliance with applicable laws. All virtual asset service providers are required to register themselves with VARA before operating in ADGM’s territory.

A closer look at Crypto Currencies

The world of cryptocurrency is moving quickly. The Virtual Asset Regulatory Authority (VARA) was announced in September 2018 by the UAE Ministry of Finance with a target launch date of January 2020. Until then, how does one navigate through all these evolving changes that affect businesses as well as individuals using virtual currencies or virtual assets like Bitcoin? This guide will help you understand what you need to know now so that when VARA comes into effect, your business can continue to thrive.

What are Crypto Currencies?

The concept of virtual currency can be understood as a digital representation of value that can be traded digitally. In practice, the virtual currency is:

a medium of exchange; and/or 
a unit of account; and/or 
The currency acts as a store of value and has no legal tender status (i.e., when tendered to a creditor, is a valid and legal offer of payment) in any jurisdiction.

For example, Bitcoin is a type of cryptocurrency. Other types include Ripple, Litecoin, Monero and many others. Within the Bitcoin network and blockchain, there are also other coins such as Ether (Ethereum), which has its own unique blockchain and functionality. It should be noted that many jurisdictions still require additional licensing or regulatory filings to operate certain businesses involving crypto-currencies or tokens such as securities exchanges, brokerage firms dealing with crypto-currencies or token offerings, traders of crypto-currencies or tokens under specified circumstances, etc.

What does the UAE Central Bank have to say about Cryptocurrencies and Virtual Assets?

As a general comment, we would say that these new developments carry associated risks. We also note that some of these may not be legal in all jurisdictions or permissible under sharia law. Additionally, several authorities, including central banks, regulators and financial sector entities, are evaluating possible regulation of virtual assets or similar instruments. 

The UAE Central Bank will continue to monitor developments in relation to cryptocurrencies and virtual assets, along with other emerging innovations. The Bank will take action as appropriate if it identifies any specific threats arising from such activities for market integrity or consumer protection.

Binance 

In May 2018 The Central Bank of Dubai issued a regulatory framework for virtual currency firms dealing with digital coins. In July 2018 Binance received a warning from UAE’s financial watchdog, stating that cryptocurrency exchanges are required to be regulated within 90 days or else face criminal penalties. Businesses working in all industries must comply with the UAE’s local regulations in order to operate in Abu Dhabi.

Top Cryptocurrency Exchanges in UAE

With over a million registered users on their platform and handling billions of dollars in trades per day, Binance is currently one of the largest exchanges in all markets. The company was founded by an ambitious cryptocurrency enthusiast Changpeng Zhao, who brought his unique experience from both Wall Street as well as the crypto exchange industry. 

He started his career on Wall Street as a software engineer for the Bloomberg Tradebook Futures Technology team, where he was tasked with building trading systems for the financial firm's hedge funds. He then moved to Tokyo to join OKCoin as CTO before moving back to China and starting his own company - BijieTech - which developed a blockchain-based solution for digital media rights management. In 2017, he decided it was time to start another venture so that he could focus more on blockchain technology development. That's when Binance was born.

Today it’s quite difficult to find a platform where we can buy or sell our digital currency in any country. The best and safest trading platform is Binance which is located in Hong Kong. This platform offers free Sign-Up with no requirements for verification of your account. Besides, it has a lot more features than other cryptocurrencies like Bitcoin etc. With the help of crypto coins, we can easily convert our digital currency into real money & vice versa.

Conclusion

I’m sure we all love money. However, nothing is more precious than time – which can never be replaced. In that case, a careful analysis of your trading results is not just a good idea, but an absolute necessity if you want to ensure that your strategy is profitable in relation to its risks – otherwise, it makes no sense at all! So instead of continuously looking at crypto prices or holding on to a position that clearly isn’t working out over longer periods of time... Why not take advantage of our market expertise?

For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004 

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