The UAE’s Securities and Commodities Authority (SCA) Starts Accepting Licensing Applications for Virtual Asset Service Providers
The federal financial regulatory agency of the United Arab Emirates (UAE), the Securities and Commodities Authority (SCA), has announced that it will begin accepting licensing applications from firms that wish to offer virtual asset services within the country. The SCA stated in a press release that all virtual asset service providers (VASPs) operating in the UAE must submit an application and obtain a license from the regulator, except for those licensed in the country’s financial free zones.
Meanwhile, digital asset companies operating within the emirate of Dubai will still need to comply with its own financial regulator, the Virtual Asset Services Authority (VARA). These companies must also apply for and obtain a license from VARA.
UAE’s Cabinet Resolution 111 of 2022 Regulates Virtual Assets
On December 11, 2022, the UAE’s Cabinet issued resolution number 111 of 2022, which aims to regulate virtual assets in order to create an attractive investment, economic, and financial environment for global companies and institutions operating in the virtual assets sector. The SCA officially announced that it is responsible for regulating and supervising the virtual assets sector in accordance with the cabinet resolution on February 1. The SCA stated that the resolution’s purpose is to “ensure the protection of investors’ funds in virtual assets from illegal practices.”
The resolution applies to all transactions related to virtual assets for investment purposes, including the non-financial free zones in the country, but the SCA has specified some limitations. They explained: “Its provisions do not apply to virtual assets that are used for payment purposes, as they are subject to the jurisdiction of the Central Bank. They also do not apply to financial free zones.”
Implications of the New Federal Virtual Asset Law in UAE
UAE-based blockchain lawyer Irina Heaver spoke with Cointelegraph on January 13 to explain the implications of the new federal virtual asset law. According to Heaver, failure to comply with the new law could result in financial fines of up to 10 million AED ($2.7 million), disgorgement of profits, and criminal investigation by the public prosecutor.
Conclusion
The UAE’s Securities and Commodities Authority (SCA) has announced that it is now accepting licensing applications from firms that want to provide virtual asset services within the country. This follows the issuance of Cabinet Resolution 111 of 2022, which aims to regulate virtual assets in the UAE. It is important for virtual asset service providers to comply with the new law to avoid potential financial fines and legal consequences.
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