By George Ward
The United Arab Emirates (UAE) has established its first federal regulatory framework for the cryptocurrency market by passing new legislation governing virtual assets. The UAE previously implemented many supervisory measures for digital assets in economic-free zones like the Abu Dhabi Global Market before the federal rule (ADGM).
Additionally, Dubai formed the Virtual Asset Regulatory Authority, a cryptocurrency regulator, last year (VARA). The action has various consequences, according to blockchain and cryptocurrency attorney Irina Heaver of the United Arab Emirates.
New Policies For Crypto Service Providers In UAE
Heaver asserts that the new legislation requires organizations that offer crypto-related services to get a license and permission from the new regulator. A significant fee might be applicable for non-compliance.
Failure to comply attracts severe penalties, including a fine of up to 10 million AED ($2.7 million), the forfeiture of revenues, and possibly a criminal probe by the public prosecutor. Heaver said that to operate legally in the UAE, “any crypto and Web3 initiative will have to create a means to comply with the new federal legislation and all of the existing rules.”
Although the minimal standards for virtual asset service providers (VASPs) are reachable, the attorney believes that many businesses may encounter some difficulty. “Those are pretty grounded. The reality, though, is that most crypto businesses don’t meet even the most fundamental standards, according to Heaver.
The crypto attorney also emphasized that the law has established minimal standards for VASPs. Heaver asserts that all VASPs must adhere to the regulations in place regarding the fight against money laundering, the funding of terrorism, and the financing of illegal groups.
All legal entities within the VASP category will also have three months to adjust to the new regulations.
Dubai’s Law On Virtual Assets
According to the lawyer, this new development is advantageous for UAE entrepreneurs, investors, and consumers as regulatory certainty allow the nation the necessary components to become the “Web3 capital of the world.”
Dubai has made significant progress in embracing cutting-edge technology like blockchain and adapting its legal framework to accommodate cryptocurrencies. Given this, it is not surprising that the Emirate of Dubai changed its course in 2022 to clarify regulations regarding digital assets.
All transactions involving digital tokens and virtual currencies inside the Emirate of Dubai, including Bitcoin, are governed by the Virtual Assets Law.