UAE Central Bank & Regulators’ Guidelines for Crypto Services

Cryptocurrencies are gaining popularity and wide adoption across multiple countries across the globe. The Asia-Pacific (APAC) and Middle Eastern countries are taking the lead. Nations falling in these regions are also putting efforts to make the environment suitable for crypto assets’ growth. But they also focus on safeguarding the investors and take action accordingly. Recently, the UAE Central Bank reportedly published guidance for VASPs. 

The Central Bank of the United Arab Emirates (CBUAE), in collaboration with other regulatory bodies in the country, has unveiled comprehensive new guidance for Virtual Asset Service Providers (VASPs) operating within the UAE. The fresh directives are accompanied by a clear framework for penalties targeting VASPs that operate without the requisite licenses within the jurisdiction.

On November 6, the National Anti-Money Laundering and Combating Financing of Terrorism and Financing of Illegal Organizations Committee (NAMLCFTC) and the CBUAE jointly released a list they termed as “Red Flags” for VASPs. 

This list encompasses indicators that may identify suspicious parties, including the absence of a regulatory license, making unrealistic promises, poor communication practices, and inadequate regulatory disclosures.

As per the new guidance, the supervisory authorities anticipate that all licensed financial institutions (LFIs), designated non-financial businesses and professions (DNFBPs), and licensed VASPs will be responsible for reporting transactions involving suspicious parties. 

The guidance explicitly states that any information related to unlicensed virtual asset activities can be reported through whistleblowing mechanisms to help regulatory authorities in their efforts to uphold the law and protect the UAE financial system.

The document further underscores that VASPs operating within the UAE without a valid license will be subject to “civil and criminal penalties, including, but not limited to, financial sanctions against the entity, its owners, and senior managers.” 

Furthermore, it outlines that LFIs, DNFBPs, and licensed VASPs found to be dealing with unlicensed VASPs will also face legal action.

CBUAE Governor’s  Remarks 

His Excellency Khaled Mohamed Balama, the governor of the CBUAE and chairman of the NAMLCFTC, emphasized the timelines of the new guidance. In his statement, he acknowledged the increased accessibility of digital assets and underscored the importance of intensified efforts in combating financial crimes as the digital economy continues to evolve. The comprehensive regulatory framework aims to maintain the integrity of the financial system in the UAE.

The introduction of these stricter guidelines signifies the UAE’s commitment to ensuring transparency, accountability, and regulatory compliance within the growing virtual asset sector. It also aligns with global efforts to combat illicit financial activities and enhance the security and credibility of the digital asset ecosystem. 

These measures will likely play a pivotal role in fostering a safe and robust environment for both investors and service providers in the UAE’s evolving financial landscape.

Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.