09 May The Dubai Virtual Asset Regulatory Authority (VARA) New Laws Governing Virtual Assets in Dubai
Following Abu Dhabi’s comprehensive regulatory framework that was issued in December last, Dubai is adopting the first law that regulates the trading of virtual assets.
The Dubai Virtual Assets Regulation Law is set to establish a highly developed legal framework to secure investors and build global standards to govern the virtual assets industry, which in turn will enhance business growth in Dubai, stated Sheikh Mohammed Bin Rashid, Vice President and Ruler of Dubai, on Wednesday.
“We established an independent authority to oversee the development of the best business environment in the world for the virtual assets in terms of regulation, licensing, governance and in line with local and global financial systems,” Tweeted Sheikh Mohamed Bin Rashid.
The UAE government is taking firm steps to develop a solid digital economy and take advantage of digital transformation’s advantages.
As a matter of fact, government figures show that the UAE’s digital economy contributes nearly 4% to the UAE’s GDP, which is equivalent to 27.2 billion dollars.
So which virtual assets fall under these upcoming regulations?
Any digitized token of value that could be traded, transferred, or used for payment including cryptocurrencies and non-fungible tokens (NFTs).
Will the regulation law apply to Dubai International Financial Center?
The Dubai Virtual Asset Regulatory Authority (VARA) will govern the virtual asset sector in Dubai and its special development zones and free zones, but not in the Dubai International Financial Center.
What will the VARA be responsible for?
The authority will be responsible for licensing, organizing, and regulating VA activities while holding legal and financial autonomy over the VA sector in coordination with the Central Bank of the UAE and the Securities and Commodities Authority and, and will be connected to the Dubai World Trade Center Authority (DWTCA).
Which VA activities will be subject to VARA authorization?
- Virtual asset portfolio management
- Trading among several types of virtual assets
- Transfer of virtual assets
- Management and operation of virtual assets platforms
- Interchange services between virtual assets and currencies, locally or internationally
- Custody and management of virtual assets
- Offering, trading, and other services related to virtual tokens
VARA will also be able to fine violators, suspend or cancel their permits, or work with the competent Dubai licensing authority to revoke their commercial licenses.
VARA was established as part of the Dubai Securities and Exchange Higher Committee’s strategy and is considered a promising step forward in protecting and developing investors, developers, traders, and marketers.