Cryptocurrency exchange platforms in the UAE are gaining popularity largely due to fewer legal restrictions. In 2022, the Emirate of Dubai passed a crypto law that regulates virtual assets. It is helping the country to project itself as the major international leader in terms of emerging technologies. These emerging technologies include blockchain and cryptocurrency.
The UAE government introduced the Emirates Blockchain Strategy in 2021. This will be immensely beneficial for the cryptocurrencies in the country. The country is trying its best to maximize the use of blockchain technology in more than 50% of government transactions. The law is designed to promote cryptocurrencies and blockchain technology.
The Vice President and Ruler of Dubai Mohammed bin Rashid Al Maktoum approved the DVARL or Dubai Virtual Asset Regulation Law. The law is meant to regulate the following activities.
These are the following activities that are subject to VARA. This amount of clarity is going to be helpful for cryptocurrency exchange platforms in the UAE.
The cryptocurrency exchange platforms in the UAE can gain significantly because of this government initiative. In February 2023, the UAE with the help of SCA will supervise the cryptocurrency sector. It will accept applications from companies that offer cryptocurrency services within the jurisdiction of the country. Every virtual asset service provider has been directed for application approval.
In May 2023, the Central Bank of UAE added more provisions to the existing regulations. It included the concepts of counter-terrorism and anti-money laundering acts. These provisions are there for every kind of virtual asset such as non-fungible tokens and cryptocurrencies.
In the UAE, different regulatory bodies regulate crypto asset activities. On a federal level, the Securities and Commodities Authority (SCA) supervises crypto assets and related services. On a local level, the VARA regulates the activities of crypto exchange platforms. It is an affiliate of the Dubai World Trade Centre Authority. The government has prescribed the setting up of rules and controls for these virtual assets. Similarly, these legal bodies apply to crypto exchange platforms. This includes YaCrypto, a famous cryptocurrency exchange platform. Other cryptocurrency exchange platforms such as Binance, BitOasis, Coinbase, Gemini and other platforms.
In the city of Dubai, there is more clarity as to who regulates compared to Abu Dhabi. This is because Dubai has the DFSA as a regulator for investment tokens. Since November 2020, the Crypto Asset Activity Regulation (CAAR) has been applied to issuers, promoters, and offerors in the UAE. It is also applicable for providing crypto custody services. There are crypto asset exchanges in the UAE and crypto fundraising platforms. It also includes conducting financial activities related to crypto assets.
In Abu Dhabi, the same functions are performed by Abu Dhabi Global Markets (ADGM). It regulates and promotes the growth of technology-driven monetary businesses. Since 2018, it has become the first regulator in the world to offer a clear regulatory framework for crypto asset activities.
The Dubai World Trade Center (DWTC) regulates crypto-related activities. It supports a free zone under the supervision of the Securities and Commodities Authority (SACA). These are the commonly permitted cryptocurrency-related activities issued by DWTC.
The laws, legal, and regulatory bodies are boosting the growth of cryptocurrency exchange platforms in the UAE. The regulatory environment for businesses is evolving and specific activities may change accordingly. The UAE government has taken many steps to ensure that crypto transactions remain legally compliant. This is a good signal for all potential crypto investors and traders in the country.
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