UAE Set To Issue Fedral Licenses For Digital Currencies In The Near Term

The United Arab Emirates (UAE) is looking to become a global hub for crypto companies. Bloomberg reports that the Middle East country is preparing to issue federal licenses for virtual asset service providers (VASPs) by the end of Q1 this year. The new legislation will open up the country to massive crypto investment. The new development comes after UAE launched its first NFT stamp last year.

The UAE is looking to attract the world’s biggest cryptos

According to the Bloomberg report, a government official disclosed that the UAE’s financial regulator, the Securities and Commodities Authority (SCA), is already wrapping up amendments to the country’s current regulations. The adjustments being made will make it a lot easier for VASPs to establish themselves in the country.

Financial free zones in the UAE including the Dubai Multi Commodities Centre, Abu Dhabi Global Market, and Dubai Silicon Oasis Authority already have regulations for giving VASPs permits to operate. However, the new licensing structure will allow VASPs to operate freely across the country, complementing licenses from local financial centers.

The UAE, which prides itself on being business-friendly, is also looking to increase the presence of crypto miners. The government official told Bloomberg that the UAE has plans to “build an ecosystem for crypto mining.”

The SCA’s plan comes after the UAE conducted a risk assessment of the crypto industry. The assessment report concluded that while a high risk that VASPs can be used for nefarious financial schemes, regulations, rather than a ban, was the best way to keep crypto adoption in check.

Crypto adoption in the Middle East

There is already a significant presence of crypto companies in the UAE. The attraction for these companies has that the UAE does not collect income taxes for crypto projects. Binance is one of the global crypto market players with a well-established presence in the country. The country also has local crypto exchanges of which BitOasis is the largest.

The result of this has been that crypto adoption has skyrocketed in the country, as more institutional players look to increase their crypto investments. UAE is the third biggest crypto market in the Middle East. It is surpassed only by Turkey and Lebanon which have embraced crypto in the midst of currency inflation crisis.