Dubai adopts ‘Virtual Assets Law’ to stimulate Crypto Investments
Lavin Nalinababu, Business Consultancy
Dubai, the UAE’s financial hub, has taken a giant step forward in the global crypto space, announcing an unparalleled law to govern virtual assets in order to attract potential forms of enterprise as regional economic rivalry becomes more competitive.
Virtual asset services will be regulated, monitored, and controlled by the Dubai Virtual Asset Regulatory Authority (VARA). The authority established the rules and procedures that oversee virtual asset operations, such as management, clearing, and settlement services. Also, VARA will function as the primary custodian for this niche sector, with the goal of anchoring the world’s virtual assets, which include cryptocurrencies and NFTs.
Let’s dive straight into the details of Dubai’s virtual assets law:
- An individual who wishes to engage in any of the virtual asset operations must first establish a presence in the city.
- It is against the law for anybody in the emirate to participate in activities without first obtaining VARA approval.
- VARA’s primary tasks are as follows:
- Organizing the issue of virtual assets and tokens, as well as their trade.
- Virtual asset service providers are regulated and authorised.
- Guaranteeing the utmost layers of safety for the personal data of participants,
- The management of virtual asset platforms and portfolios,
- Checking transactions and preventing the price manipulation of virtual assets
- The following activities are subject to VARA authorisation and control:
- Services for exchanging virtual assets and currencies
- Services for virtual asset custody and management
- Service transaction between one or more types of virtual assets, and
- Services for the transfer and administration of virtual assets
- A decision made by the board of directors of the Dubai World Trade Centre would define the activities that represent a breach of the requirements of this virtual asset law and its associated decisions, as well as the penalty imposed on an offender. Other than imposing a penalty, Dubai VARA has the right to revoke the permission for up to 6 months, cancel the permit, and collaborate with the Emirate’s competent commercial licensing body to revoke the commercial license.
The Ruler of Dubai, Sheikh Mohammed bin Rashid Al Maktoum, remarked that “the law presents a vital step that aims to advance the digital sector and protect the rights of investors, along with providing the most advanced virtual asset ecosystem in terms of organization, governance, and security.”
The law defines the responsibilities and powers of the VARA authority, which will be deemed the responsible authority to govern, oversee, and manage virtual asset services, and enters into effect when it is released in the official Gazette.
Except for the Dubai International Financial Centre, the virtual assets law will pertain to all special development zones, the Dubai mainland and free zones in the Emirate. The Dubai Virtual Asset Regulation Law strives to establish Dubai as a global hotspot for the virtual asset market as well as to play a role in determining the industry’s evolution.
As the globe shifts its paradigm towards technological developments like cryptocurrencies and blockchain, the new virtual assets law will drive the crypto sector in the UAE.
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