The UAE has been building a strong relationship with the cryptocurrency industry in some of its regions, but now, the federal financial regulatory agency of the UAE seeks to offer licenses to crypto companies that would allow them to offer virtual asset services country-wide. According to the recent announcement by the nation’s Securities and Commodities Authority (CSA), all virtual asset service providers who wish to operate in the country will have to submit an application to obtain the license.
The applications should be submitted to the CSA itself. The only companies exempt from going through the process are those already owning the licenses to operate in financial free zones.
Meanwhile, cryptocurrency companies that operate in the emirate of Dubai will still have to be in compliance with Dubai’s own, local financial regulator — Virtual Asset Services Authority (VARA). In other words, Dubai-based virtual asset service providers will need a VARA license and the CSA license.
UAE’s financial regulators opens licensing Applications for VASPs. pic.twitter.com/xjfxGN7ie3
— Zyllot (@zyllot) April 18, 2023
The UAE is bringing laws to regulate virtual assets
On December 11th, 222, the UAE’s Cabinet issued a new resolution number 111 of 2022. The resolution regulated virtual assets to provide an “attractive investment, economic and financial environment for global companies and institutions operating in the virtual assets sector,“ as the document says.
The SCA also said that it is undertaking the regulating and supervising in the crypto sector, pursuant to the cabinet resolution on February 1st. The regulator further stated that the resolution’s goal is to ensure that the investors’ funds in virtual assets would be protected, particularly from illegal practices.
Apart from that, the SCA also added that the new resolution will apply to all transactions that involve virtual assets used for investment purposes, even when it comes to non-financial free zones of the UAE. With that said, the regulator noted that some limitations would have to be set into place.
They explained that the resolutions do not apply to virtual asses used for payment purposes, as they are actually subject to the jurisdiction of the country’s central bank. Also, they do not apply to financial free zones, as they have their own rules meant to offer a more open experience to those who operate there.
Irina Heaver, the UAE-based blockchain lawyer, spoke earlier this year about the new federal virtual asset law, explaining its implications. She said that failure to comply with the new laws could lead to massive financial fines, which could go up to $2.7 million (10 million AED). Apart from that, those who get fined could also be subject to disgorgement of profits, or even a criminal investigation by the public prosecutor.
The UAE is now open for business! 🤝 Federal financial regulator will accept licensing applications from companies offering virtual asset services. Protecting investors and punishing non-compliance with fines of up to $2.7 million. #UAE #investment #fintech
— Krypton AI (@KryptonAi) April 18, 2023
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