Dubai hopes to attract crypto businesses and investors through a new rulebook. Dubai’s Virtual Asset Regulatory Authority (VARA), released 2023’s edition of crypto regulation this Wednesday. In order to issue virtual assets legally in Dubai, entities must comply with the rulebook, starting with applying for a licence to operate business in the Emirate.
The new set of Dubai crypto regulations aim to promote Dubai as an environment where crypto businesses can thrive – with focus on protecting digital asset dealers and investors, and curbing illegal and malicious practices.
VARA, under the government of Dubai, was established to help the Emirate forward towards its goal of becoming a regional and international fintech hub, and to increase its competitive edge in the region and beyond.
Helal Saeed Almarri, Director General Dubai’s Department of Economy & Tourism and Chairman of VARA’s Executive Board, said in a statement that the mission is “to establish the Emirate as the capital of the future economy anchored by metaverse, AI, Web3.0 and blockchain.”
VARA is “the world’s only independent and specialist regulator for Virtual Assets to serve as the accelerator for a truly borderless Digital Economy,” According to Almarri. Almarri describes Dubai’s approach to the crypto industry as a “custom-designed construct” that “reflects UAE’s commitment to building responsible safeguards, and Dubai’s confidence in delivering a progressive VA ecosystem that nurtures next-gen innovation.”
In the 2023 Dubai crypto regulation rulebook, any entity wishing to do business involving crypto must be authorised, and receive a licence from VARA before offering any services. Violation, VARA says, will result in fines, civil penalties, and “other enforcement actions” against any entity responsible.
Licences can potentially be revoked, with reasons including material violation of any law, regulation, rule, or directive, insolvency, being subject to insolvency proceedings, or failure to pay a judgement by a court within or outside of the United Arab Emirates.
VARA has also added topics such as the financing of terrorism and other unlawful organisations, insider dealing and trading, unlawful disclosure, and market manipulation in its new regulatory clauses regarding money laundering.
The Dubai crypto regulation rulebook specifies certain exemptions, such as professional exemptions for “duly registered” practising lawyers, accountants, or “other professionally licensed business consultants that carry out any [virtual asset] activity in a manner that is wholly incidental to their professional practice.” Professionals who hope to keep these exemptions must be appropriately authorised in order to operate in Dubai, and must maintain professional indemnity insurance applicable to their profession.
Several international blockchain firms have applied for and acquired licences to operate inside Dubai, including Binance, Coinbase, Huobi, Kraken, and the now-disgraced FTX. Back in December 2021, Binance entered an agreement with the Dubai World Trade Centre Authority to help launch a hub to assist in licensing blockchain businesses in Dubai.
Dubai’s government has been familiar with the blockchain since 2019 – with Dubai’s Department of Economic Development moving its services to a blockchain-based business registry platform called the Unified Business Registry Platform (UBRP). The platform lets entities in the city validate business licences, in order to better regulate business transactions. UBRP is built on the Dubai Pulse blockchain platform.