In a bid to clean up the business climate and protect consumers, the Virtual Asset Regulatory Authority (VARA) has introduced a comprehensive regulatory framework for the crypto sector in Dubai. The new guidelines are expected to boost the crypto sector in Dubai and encourage many companies to establish themselves as virtual asset service providers in Dubai. Some companies have already expressed their wish to expand their operations in Dubai.
New regulations to boost crypto in Dubai
Dubai has ambitions to become THE global crypto hub and the local authorities want to give themselves the means to achieve their ambition. As part of this, the Virtual Asset Regulatory Authority (VARA), the state body in charge of overseeing the crypto sector in Dubai has introduced a new regulation of the crypto sector.
The new crypto regulatory framework in Dubai accommodates almost every aspect of the crypto sector. In particular, the text consists of four main regulations and seven specific regulations. The 4 main regulations set out the rules for corporate, compliance and risk management, technology and information, and market conduct.
The other seven specific regulations that complement the new regulations address the risks associated with each crypto activity. These include rules applicable to crypto issuance activities, crypto consulting, crypto brokerage, crypto custody, crypto exchanges, crypto lending and borrowing, and crypto management and investment.
It should be noted that the new regulation applies to Dubai-based crypto market participants. However, crypto traders operating in the Dubai International Financial Center are not affected.
VARA’s optimism about the new crypto regulations
The new crypto regulatory framework is the work of the Virtual Asset Regulatory Authority (VARA). This state agency was established in 2022 to boost crypto and blockchain adoption in Dubai. VARA’s independence from other state and economic entities enhances its freedom to come up with initiatives that can boost the much-fought crypto sector.
According to the VARA, this new regulatory framework aims to provide virtual asset service providers (VASPs) with rules that establish a business model suitable for the crypto sector. These rules will provide clarity, certainty and mitigate market risks for crypto players. This should develop economic sustainability and financial security for both providers of virtual asset services and consumers.
With rules and guidelines designed to provide clarity, certainty, and mitigate market risk, VARA seeks to develop a framework to ensure global economic sustainability in an environment focused on borderless, technology-independent, and forward-looking innovation.
VARA
High expectations from crypto players
Several analysts believe that the new crypto regulatory framework adopted in Dubai should boost economic growth in the region. This is particularly the opinion of Irina Heaver, a crypto and blockchain lawyer based in the United Arab Emirates. Responding to our Cointelegraph colleagues, Heaver said that regulatory clarity boosts business by reassuring investors and consumers, among others.
Regulatory certainty is very good for business. It’s good for consumers, it’s good for investors, and it’s good for the emirate of Dubai. Regulations are long overdue and generally well received.
Irina Heaver
Some global crypto companies have actually already vowed to shut down their operations in Dubai due to regulatory clarity. This is the case with Liminal, a platform offering digital wallets based in Singapore. Its founder Mahin Gupta told our Arabian Business colleagues that the new regulations encourage companies to choose the UAE as a base to build the future of crypto. This is among other things what his company is about to do, he reports.
We will now explore the UAE as a market with huge commercial potential for secure technology-driven services in the crypto and blockchain space.
Mahim Gupta
FTX’s collapse, Block-Fi’s bankruptcy, Luna’s descent into hell, … 2022 was one of the worst years for the crypto ecosystem. Faced with these multiple challenges, the best state response is regulation. Dubai understands this and should make the most of it. Just with the 2022 crypto law, Dubai has attracted 500 out of 3049 crypto companies that set up there in one year according to data from the Dubai Multi Commodities Centre (DMCC). The new comprehensive regulatory framework proposed today is expected to attract even more players and confirm the emirate’s status as a global crypto hub acknowledged by several observers.
I dream of a world where every citizen has total control over themselves, including their finances. I believe that Bitcoin is one of the tools that will achieve this revolution. Since 2019, I am learning about this cryptocurrency and spreading the word around.
