Dubai’s New Virtual Assets Law Boosts UAE’s Crypto Market
The new law is applicable to all entities dealing with virtual assets that are set up on the mainland as well as free zones, including special development zones. However, it does not apply to the Dubai International Financial Center (DIFC), which will have its own set of rules and regulations governing all virtual assets entities registered with the DIFC.
Dubai is well poised to attract new investments and launches in the burgeoning Cryptocurrency and Blockchain sector with the launch of its latest law that aims to provide a regulatory framework for entities dealing with Virtual Assets.
Dubai Law No. 4 of 2022 Regulating Virtual Assets in the Emirate of Dubai (the “New Law”), issued on February 28, 2022, is a progressive step to facilitate the emerging needs of the Cryptocurrency market in the Emirate. It has broad-ranging implications for any person(s) or business entities that express interest in carrying out activities pertaining to Virtual Assets in the Emirate of Dubai.
The New Law, in essence, not only defines the category of virtual assets but also outlines rules and regulations for setting up and conducting any business or operation dealing with such activities. What is a Virtual Asset as defined by the New Law?
The New Law identifies ‘Virtual Asset’ as a representation of a value that can be digitally traded, transferred, or used as an instrument for exchange, payment or investment. The New Law is applicable to all entities dealing with virtual assets that are set up on the mainland as well as free zones, including special development zones.
However, it does not apply to the Dubai International Financial Center (DIFC), which will have its own set of rules and regulations governing all virtual assets entities registered with the DIFC. Regulation of virtual assets in Dubai is one of the important aspects of the New Law is the establishment of an independent legal entity, called the Dubai Virtual Asset Regulatory Authority (”VARA”).
The aim of VARA is to regulate the activities pertaining to virtual assets in the Emirate. Interestingly, VARA will be associated and affiliated with the Dubai World Trade Centre (DWTC). VARA’s main objectives are as follows:
– Developing Dubai’s digital economy to make it a global destination for virtual assets;
– Encouraging and promoting innovations in the Crypto and Blockchain sectors;
– Attracting foreign investments to the region;
– Monitoring the virtual asset industry and preventing any illegal activities;
– Protecting the interests of investors and dealers in virtual assets, Crypto, and Blockchain sectors;
– Regulation of virtual assets in Dubai In the near future, VARA is expected to issue new rules, regulations, and by-laws to further formalize the process of trading virtual assets.