Dubai's New Virtual Asset Regulation Law Comes Into Effect
H.H Sheikh Mohammed bin Rashid Al Maktoum issues a law that will keep Dubai among the key players in designing the future of virtual assets globally.
H.H. Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has announced the issue of the Dubai Virtual Asset Regulation Law, which will apply throughout the Emirate, including special development zones and free zones, with the exception of the Dubai International Financial Center (DIFC).
The new law also envisions the establishment of the Dubai Virtual Asset Regulatory Authority (VARA), which will have a legal personality and financial autonomy as well, and further be linked to the Dubai World Trade Centre Authority.
In a statement, H.H Sheikh Mohammed said, "Approving the virtual asset law and establishing the Dubai Virtual Asset Regulatory Authority is a vital step that establishes the UAE's position in this sector, a step that aims to help the sector to grow and protect investors."
The law is aimed at creating an advanced legal framework to protect investors and designing much-warranted international standards for virtual asset (VA) industry governance that will promote responsible business growth, under prudential regulations.
The establishment of the VARA comes as a part of the strategy of the Dubai Securities and Exchange Higher Committee. The VARA will provide a full range of virtual asset services in coordination with the Central Bank of the UAE and the Securities and Commodities Authority.
The VARA has been mandated with organizing and setting the rules and controls that govern the conduct of VA activities, including management services, clearing and settlement services, in addition to classifying and specifying types of virtual assets.
Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the UAE's position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors. pic.twitter.com/LuNtuIW8FM— HH Sheikh Mohammed (@HHShkMohd) March 9, 2022
The law further stipulates that it is prohibited for any person in the Emirate to engage in activities without VARA authorization. In addition, any person wishing to practice any of the virtual asset activities must establish a presence in Dubai to conduct business.
The activities that are subject to VARA authorization include operating and managing virtual assets platforms services, exchange services between virtual assets and currencies (whether national or foreign), exchange services between one or more forms of virtual assets, virtual asset transfer services, virtual asset custody and management services, services related to the virtual asset portfolio, and services related to the offering and trading of virtual tokens.
The acts that constitute a violation of the provisions of this law and its related decisions, and the fines imposed on a violator, shall be determined by a decision issued by the board of directors of the Dubai World Trade Centre.
In addition to the penalty of a fine, the VARA may also take any of the following measures against the violator: suspend the permit for a period not exceeding six months, cancel the permit, and coordinate with the competent commercial licensing authority in the Emirate to cancel the commercial license.