New Crypto Framework in Dubai Could Position It as the Region’s Leader

Ruler of Dubai and Prime Minister of the UAE, HH Sheikh Mohammed bin Rashid Al Maktoum, took to Twitter to make two major crypto-related announcements. Apart from approving an initial virtual assets law, the Dubai Virtual Assets Regulatory Authority has been appointed as the supervisor for the sector.

Lately, Dubai has become a crucial crypto hub for both investors and creators. What is worth noting is that the hotspot has hosted several crypto conferences in the past year, with the upcoming Crypto Expo reported taking place this month.

Additionally, as the financial capital of the Middle East, UAE is the third-largest crypto market in the region, behind Turkey and Lebanon, as per data compiled by Chainalysis from July 2020 to June 2021.

Mohammed bin Rashid noted that the goal is to “establish the UAE and Dubai’s position as a key player in designing the future of virtual assets globally.”

Meanwhile, Binance, the largest crypto exchange by volume, is also reportedly eyeing a license in Dubai. Amid its expansion in the Middle East, Binance received in-principle approval to become a crypto service provider by Bahrain’s central bank some time back.

With the new rules, the Dubai Virtual Assets Regulatory Authority will authorize and oversee the operation and management of crypto platforms, virtual asset custody, and transfer, along with monitoring price manipulation in space. Among other roles, the protection of investor data will also be the regulator’s area of supervision.

The announcement also comes a day after the Securities and Commodities Authority (SCA) of the UAE stated that a new framework will assure AML/CFT compliance across the region. It includes eliminating risks of money laundering and terrorist financing, along with adhering to the recommendations and requirements of the Financial Action Task Force (FATF), the watchdog had noted. What is noteworthy is that up until now, the SCA was the sole authority that supervised and oversaw the activities and services related to virtual assets in the UAE.

Going forward, VARA will oversee the virtual asset space in Dubai, but it bars the regions under the state-owned financial free zone DIFC as per Reuters. FSA will reportedly be DIFC’s regulator.

Helal Saeed Almarri, the director-general of the DWTCA noted that the new law and the appointment of a sector regulator will strengthen the position of the UAE and Dubai by attracting leaders from the globe. He added,

“The Dubai Virtual Asset Regulatory Authority will provide a full range of VA [virtual asset] services in coordination with the Central Bank of the UAE and the Securities and Commodities Authority.”