The emirate of Dubai has approved a law on virtual assets and formed an agency that will regulate the crypto industry.
Sheikh Mohammed bin Rashid Al Maktoum announced this on Twitter. He emphasized that the introduction of the concept of virtual assets in the legislation will strengthen the position of Dubai in the emerging digital economy. The law represents an important step towards the development of the digital and cryptocurrency sector, as well as protecting the rights of investors. The law applies to free zones throughout the emirate, with the exception of the Dubai International Financial Centre.
“The future belongs to those who design it. Through the Virtual Assets Act, we will contribute to shaping the future of this emerging sector,” wrote Mohammed bin Rashid Al Maktoum.
As part of the approved law, a new agency, the Dubai Virtual Assets Regulatory Authority (VARA), was created. It will control the issuance of NFTs and other cryptocurrencies, monitor the protection of users’ personal data, and monitor cryptocurrency platforms and digital wallets. The agency will also monitor suspicious cryptocurrency transactions and take measures to prevent market manipulation of crypto assets.
Without a VARA license, no organization will be able to legally engage in cryptocurrency activities in the emirate. In particular, any virtual asset service provider (VASP) must obtain a license, including cryptocurrency trading platforms, exchangers and custodial services. There are fines for violation of the law, the amount of which is determined by the board of directors of the Dubai World Trade Center. In addition to imposing fines, VARA may suspend a license for up to six months and revoke an issued license.
The issuance of federal licenses for VASP in the United Arab Emirates became known in February. The UAE government believes that it is the regulation of the cryptocurrency industry, and not its ban, that will reduce the risks to financial security.
