Crypto Law and Its Effects On The Ease Of Business In Dubai

With an aim to establish itself as a global leader in emerging technologies such as cryptocurrencies and blockchain, the Emirate of Dubai has passed its first crypto law and established a virtual asset regulating agency. The Dubai Virtual Assets Regulatory Authority has been established within the United Arab Emirates (UAE) to work with all related organizations to improve security and transparency for crypto investors. The Dubai Virtual Assets Regulatory Authority, or VARA, will be in charge of controlling and approving virtual asset service providers as well as regulating and licensing the sale of virtual assets and virtual tokens. Following the new developments, a significant question arises regarding the function of VARA and the impact of regulation on the ease of business setup in Dubai.

Objectives of new legislation on cryptocurrency

• Regulating international cryptocurrency activity and related service providers in order to legalize the crypto business in Dubai.
• Regulating risk management in trading and insuring virtual assets and virtual tokens.
• Legalizing Virtual Asset Service Providers (VASPs).
• Protection of personal data of beneficiaries
• Curbing price manipulation.

How to set up a crypto business in Dubai?

UAE security regulator (SCA) will be the central authority for licensing and supervision on the UAE mainland, as well as in the virtual world.

• To operate as a (regulated) crypto exchange operator, custodian, broker, or advisor in the UAE, a No Objection Certificate (NOC) from the SCA is required.
• To advance with any corporate license application, a NOC is required for certain regulated activities.

Except for the state-owned financial free zone, Dubai international financial center (DIFC), the new rule will apply nationwide. The DIFC's regulator, the Dubai Financial Services Authority (DFA), is developing its own cryptocurrency regulations.

What are the prerequisites for starting a crypto business in Dubai?

Since the detailed regulation is yet to be released by the government, the FSRA's "Regulation of Crypto Asset Activities in ADGM" is the most comprehensive cryptocurrency guidance in the country. A blockchain business operating in Dubai must meet the following standards:

• Only a limited number of crypto assets are permitted. Market capitalization, traceability, security, price volatility, and other characteristics are used to make decisions about specific crypto assets.
• "Hold cash resources equivalent to 6 months' operations expenses" in fiat (12 months' equivalent for crypto exchanges).
• Every crypto company operational in Dubai has to undergo a compulsory KYC to detect and prevent fraud.
• The management of risks and the disclosure of information are both required.
• It is obligatory to keep funds and information safe via "code version control, update implementation, issue resolution, and regular internal and third-party testing."

What are the benefits of starting a crypto business in Dubai?

As Dubai aspires to become the world's cryptocurrency capital, some advantages for entrepreneurs should be noted. Entrepreneurs can benefit from setting up cryptocurrency businesses in Dubai in the following ways:

• Transactional costs are low
• Improved security
• Data privacy is important
• Increased brand awareness for your company
• There are ample opportunities to engage with investors
• It is possible for foreign nationals to have 100% ownership of a business without the need for any local partners
• There are no limits on the transfer of a company's profits or capital
• Favorable tax system
• Import and re-export taxes are set at zero percent
• There are no existing restrictions on foreign personnel working for the company

Also read : The UAE’s Growing Appetite for Crypto and Blockchain

How can FlyingColour help to establish a crypto business in Dubai?

Our firm will assist you in completing the documentation requirements as we are competent with the rules and regulations of business establishments in Dubai. FlyingColour will make certain that the due process of law is followed while you establish your business in Dubai. Following the policies and guidelines will ensure that you are not inadvertently breaking the law. Since establishing a new business setup in Dubai from a foreign mainland may be difficult due to numerous legal barriers, we can make certain that all misunderstandings are acknowledged. We will provide specifics in real-time while the bill is being drafted. Contact us now if you are seeking help establishing crypto businesses in Dubai, United Arab Emirates.