Regulation of Virtual Assets in the Emirate of Dubai
It has been proven time and time again that the UAE and Dubai in specific have a progressive and forward-thinking approach to adjusting and acclimatizing to the ever-changing landscape of progress and advancement in all things related to the digital space.
In 2021, the Dubai World Trade Centre Authority (“DWTCA”) and the Securities and Commodities Authority (“SCA”) entered into a Memorandum of Understanding to regulate the offering, issuance, listing and trading of crypto assets within DWTCA’s free zone jurisdiction. In 2022, the Dubai Financial Services Authority (“DFSA”) issued its Consultation Paper No. 143 for the Regulation of Crypto Tokens in preparation for regulation and dealing with Cryptocurrencies. Furthermore, and in commitment to progress, Dubai Law No. 4 of 2022 on the Regulation of Virtual Assets in the Emirate of Dubai (the “Law”) was issued.
Highlights of some of the key aspects of the Law:
- Although the Law has been released, it will be effective from its publication in the Official Gazette.
- The Law only regulates and deals with virtual assets in the Emirate of Dubai (excluding the DIFC) and is not on a Federal level.
- The regulator for digital assets will be a newly established authority called the Dubai Virtual Assets Regulatory Authority (“VARA”).
- Virtual assets, according to the Law are “digital representation of value which can be digitally traded or transferred or used as an exchange or payment tool or for investment purposes.”
- Any entity seeking to provide virtual asset services, must obtain a license from VARA and will only be able to operate in the Emirate of Dubai.
- VARA has been tasked to raise awareness of dealing in virtual assets, ensure data protection of beneficiaries, provide Anti Money Laundering support and coordinating with the UAE Central Bank.
- Provisions of the Law set out the activities which are subject to the licensing and regulation by VARA.
- Separate implementing decisions are expected to be issued by the VARA on the implementation of the DVAL, which would include description of the activities, exempted virtual assets, procedures for licensing and associated fees and charges.
How Can We Help?
Hamdan Al Shamsi Lawyers and Legal Consultants are perfectly positioned to assist our clients in respect of all claims in the Dubai Courts. Our firm has three divisions including (1) the DIFC team; (2) the UAE Litigation team; and (3) the Corporate team, and currently deal with a network of other law firms around the world including the USA, UK, France, Italy, Germany, Saudi Arabi, Oman, Kuwait, Bahrain, Jordan, Lebanon, China and Australia.
Our specialized lawyers in Commercial Law will be able to further assist and answer any questions you may have.
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Ahmad Al Khalil | Partner
Hamdan Al Shamsi Lawyers & Legal Consultants