On February 28, 2022, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Ruler of Dubai, signed Law No. 4 of 2022 on the Governance of Virtual Assets in the UAE (the “Virtual Assets Law“). Dubai International Finance Centre (“DIFC”), the landmark Virtual Assets Law is an innovative and significant legislative breakthrough in Dubai. It applies to virtual assetservices delivered throughout the Emirate of Dubai and Dubai’s special development and free zones.
The Virtual Assets Law is a key step in defining the Emirate of Dubai’s place in the virtual asset sector, and it will definitely have significant ramifications for the virtual asset landscape in Dubai in the future. The introduction of the new Virtual Assets Law reflects the growing interest in virtual assets in the United Arab Emirates (“UAE”) and the region at large.
Dubai’s adoption of the Dubai Asset Regulation Law effectively propels the city-state to the forefront of emerging technologies like cryptocurrency and blockchain. The Dubai Virtual Assets Regulatory Authority was established by the emirate. This authority will collaborate closely with all parties to ensure crypto investors’ safety and transparency.
Dubai Virtual Asset Authority’s responsibilities
- Coordinating, licensing, and dealing with virtual assets and virtual tokens
- Managing and registering virtual asset service providers
- Ensuring the highest levels of protection for consumers’ personal data
- Arranging the operation of VA networks and portfolios
What does this law imply for the United Arab Emirates?
For the time being, the law governing virtual assets has only been implemented in the emirate of Dubai. Almost all free zones will be subject to this rule. Non-financial free zones, such as the Dubai Multi Commodities Centre, are included (DMCC). This law, however, does not apply to the Dubai International Financial Centre (DIFC). This is due to the fact that it is a one-of-a-kind free zone with its own set of rules. It is also governed by the Dubai Financial Services Authority (DFSA). The DFSA has announced that it will develop its own set of laws and regulations for DIFC in the context of cryptocurrencies in the near future.
The Securities and Commodities Authority (SCA), on the other hand, has indicated that it is developing its own cryptocurrency regulatory framework. It has also been reported that it is on the verge of being released. The introduction of a new crypto law in the UAE opens the door to the issuing and trading of cryptocurrencies such as Bitcoin and Litecoin. Furthermore, the new Dubai rule would provide a sophisticated legal policy to protect investors as well as international norms to oversee crypto, virtual assets, and NFTS. The VARA regime is set up in such a way that it encourages collaboration, encourages innovation, and prioritises public safety.
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Contact the FlyingColour team if you have any queries about recent changes or how they might affect your present or future business.