01 Mar Everything You Need to Know About Crypto License in Dubai
The United Arab Emirates has adopted blockchain innovation as a driving force for businesses, intending to capitalize on the power of blockchain platforms to transform government transactions, making the UAE one of the leading economies in the world with an unmatched readiness to embrace and improve in parallel with advanced technologies.
With solid support from the UAE government, Dubai is certain to shine as an international hub for blockchain innovations set to optimize business transactions throughout different industries.
In efforts to keep up with the latest in the technological advancements arena, The Dubai Multi Commodities Center (DMCC) has shifted the UAE’s position among top global markets as they launched their Blockchain and Crypto Center which is now renowned as a pioneering Crypto hub.
What is DMCC Crypto Center?
The Crypto Center launched by DMCC enables crypto investors to start up their crypto-based company within the Freezone, with best-in-class infrastructure and rich facilities which have been built to foster crypto businesses to grow and flourish.
Where Can You Start?
In order to proceed, first, you need to understand the requirements and regulations to set up a crypto company, and so let’s start with Types of Crypto Licenses:
The first step to a start-up of any type of business is obtaining a license, and that’s what you need to do at the early stage of starting your crypto business.
The DMCC provides 2 categories of crypto licenses depending on the nature of your business activity:
1- Crypto Trading License:
This license is issued by the DMCC Free Zone Authority through which you are permitted to buy and sell crypto commodities. However, this license comes with some regulatory restrictions. For example, this license cannot be issued to companies who take part in crypto exchange activities, crypto brokering, financial, banking, storage servicing, or payment processing. Crypto trading licenses can only be applied prior to approval from the management of the free zone. Similarly, the DMCC has issued a proprietary trading license. To acquire the license, your crypto company should not engage in any other activities and should have a minimum share capital of AED 50,000.
2- Distributed ledger Technology Service:
For this license, your business activities should be related to providing management solutions for databases, distribution of ledger-based technologies such as blockchain. Under this license, these companies are not permitted to trade or set up cryptocurrency exchanges, provide any financial-related services, or process any payment. To acquire this license you also need DMCC approval and a capital share of AED 500,00 at least.
Now that you have decided on the type of license that fits with your business activities, let’s go through the requirements.
Requirements for Obtaining a Crypto License:
1- A commercial license issued by the Dubai Department of Economic Development (DED) must be submitted
2-Copies of valid passports of all business members must be submitted
3- Capital resources and operational expenses documents for the past 12 months period must be documented and submitted
4- Crypto-assets should be aligned with the financial free zone departments of the UAE
5-All information must be secured in a crypto wallet
6- A clean record of activities must be submitted
Once the requirements are ready, you can proceed with the application for a crypto license, so what does the application process look like?
Application Process for Crypto License:
Choose a name for the company
Choose company activity
Choose a matching legal structure
Submit a business plan brief and share capital to run the company
Choose an office space
Proceed with payment to obtain the license.
Lastly, the DMCC has signed a Memorandum of Understanding (MoU) with the Securities and Commodities Authority (SCA) to set foundational guidelines for crypto businesses operating within the free zone. As a result, crypto companies in DMCC are required to adhere to a set of regulations and compliance obligations.
Regulations and compliance obligations for crypto companies:
Abide by strict KYC norms
Disclosure of Ultimate Beneficial Ownership (UBO)
Adherence to the UAE’s Anti-Money Laundering and Counter-Terrorism Financing Law (AML-CFT)
Submission of a proofing document of sufficient capital to run the company successfully for a minimum of six months.