Dubai publishes a new set of rules for crypto, including mandatory licenses for crypto firms

Dubai recently made a move to address the increased adoption and presence of the crypto industry on its territory by publishing a new set of rules and laws addressing the matter. According to the extensive rules published yesterday, February 7th, cryptocurrency companies now have to obtain authorization and relevant licenses in order to operate in Dubai.

BREAKING: 🇦🇪 Dubai releases #crypto regulations for virtual asset services providers 🔥🚀 pic.twitter.com/7nw7EGgf6v

— Keyur Rohit (@CryptoKingKeyur) February 7, 2023

The rules have revealed detailed requirements for all companies involved with digital currencies, from the new norms regarding cybersecurity to risk-management and compliance standards. There are also separate rules that address specific crypto-related activities, including custody, issuance, advisory, and exchange services.

What do the new rules include?

According to the new rules, everything involving cryptocurrencies — from activities to companies — will now be supervised by VARA (Virtual Assets Regulatory Authority), a new regulatory body set up in 2022 to serve as Dubai’s personal crypto watchdog.

Dubai wanted a thorough oversight of the sector, as it saw an opportunity in the crypto industry, and it sought to attract blockchain and crypto firms. After it was established, VARA released several guidelines involving cryptocurrency advertising, with plans to release a more comprehensive rulebook by the end of 2022.

Dubai issues crypto regulations for virtual asset services providers Key takeaways:

No organisation may provide virtual asset services in Dubai unless it has a licence from VARA.

Non-compliance is punishable by a fine of between 20,000 and 200,000 AED.

To provide assuranc… pic.twitter.com/G8VCv5P3pD

— Web3 Daily (@web3_247) February 7, 2023

The rules are now out, and the regulator said that,

With bespoke rules and guidelines designed to provide clarity, assure certainty, and mitigate market risks, VARA seeks to develop a model framework for global economic sustainability within an innovation-centric environment that is truly borderless, technology agnostic, and future-focused.

The regulators are rushing to establish crypto rules

Out of the seven emirates that make up the UAE, Dubai is by far the most populous one. As such, it also nurtures massive ambitions when it comes to becoming the fintech hub in the area.

So far, numerous crypto firms, including the European version of FTX, have claimed that they already obtained the VARA approval. However, when during the 2023 World Economic Forum that took place in January 2023, VARA stated that not a single company had received the approval at that time.

Dubai regulators are only one example of an attempt to take control of the crypto industry. Many others around the world have been trying to set up crypto supervision since last year, when the market crashed and led to the collapse of numerous high profile platforms and companies.

Many of the regulators have seen some progress already. Dubai is one example, while the EU is getting closer to approving its own licensing regime. Meanwhile, South Korea, the UK, and many other jurisdictions are also trying to form their own regulatory frameworks.

Even Dubai’s new framework is not yet active, as it still requires the final approval from the authorities before it gets officially implemented.

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