The UAE’s prime minister and ruler, Sheikh Mohammed bin Rashid Al Maktoum, has announced a new law in the Dubai emirate on virtual assets as well as the creation of a crypto regulator.
Sheikh Al Maktoum announced on Wednesday that he had issued a law in the Emirate of Dubai providing a legal framework for cryptocurrency, with the goal of protecting investors and “defining much-needed worldwide standards” for industry governance.
A newly constituted Dubai Virtual Asset Regulatory Authority, or VARA, would also have enforcement powers in the Emirate’s special development and free zones, with the exception of the Dubai International Financial Centre, according to the ruler.
“Approving the virtual asset law and establishing the Dubai Virtual Asset Regulatory Authority is a critical step in strengthening the UAE’s position in this industry,” the Sheikh stated.
About the new law on virtual asset
The crypto law, according to Sheikh Al Maktoum, will force residents of Dubai to register with VARA before engaging in crypto-related activities.
Businesses that deal with virtual assets must also have a presence in Dubai. These operations include running a cryptocurrency exchange, transferring cryptocurrencies, and providing other token-related services.
The announcement did not clarify which cryptocurrencies would be covered by the law, but it did say that VARA would define and specify the different forms of virtual assets, as well as establish rules and controls.
Anyone caught breaking the new law might face fines as well as having their company license suspended or revoked. When infractions occur, the board of directors of the Dubai World Trade Centre will decide what to do.
It’s unclear how the legal framework will affect free zones like the Dubai World Trade Centre, which stated in December that it would become a complete zone and regulator for cryptocurrency, products, operators, and exchanges.
Binance CEO Changpeng Zhao praised the establishment of VARA in Dubai, adding that regulatory certainty for cryptocurrencies was critical – Zhao bought an apartment in the city in October 2021.
Dubai, being an Emirate within the UAE, has its own set of laws and regulations, as well as many “free zones” where people can form businesses and apply for trade licenses.
The Dubai Financial Services Authority, for example, is the financial regulator for the Dubai International Financial Centre and has developed its own crypto framework.