Dubai creates a virtual asset regulator and announces a new cryptocurrency law

Sheikh Mohammed bin Rashid Al Maktoum, the UAE's Prime Minister and ruler, has announced a new law on virtual assets as well as the creation of a crypto regulator.

Dubai creates a virtual asset regulator and announces a new cryptocurrency law

Sheikh Al Maktoum announced on Wednesday that he had published a law in the Emirate of Dubai providing a legal framework for cryptocurrencies with the goal of protecting investors and "developing highly-guaranteed international standards" for the industry's governance. In addition, with the exception of the Dubai International Financial Centre, the ruler stated that the newly constituted Dubai Virtual Assets Regulatory Authority, or VARA, has enforcement powers in the emirate's special development and free zones.

"Passing the virtual assets law and establishing the Dubai Virtual Assets Regulatory Authority is a critical step in strengthening the UAE's leadership in this sector," the sheikh stated.

The crypto law, according to Sheikh Al Maktoum, will force residents of Dubai to register with VARA before engaging in crypto-related activity. Companies that deal in virtual assets must create a presence in Dubai as well. Operating a cryptocurrency exchange, making cryptocurrency transfers, and other services linked to the offering and trading of tokens are among these operations.

VARA would categorize and specify the sorts of virtual assets, as well as establish rules and controls, according to the release, which did not specify which cryptocurrencies would be subject to the law. Anyone who breaks the new law might face fines as well as having their business license suspended or revoked. When infractions occur, the Board of Directors of the Dubai World Trade Center will decide what to do.

It's unclear how the legal framework will impact free zones like the Dubai World Trade Centre, which announced in December that it would become a comprehensive and regulated zone for crypto, products, operators, and exchanges. Binance CEO Changpeng Zhao applauded the establishment of VARA in Dubai, stating that regulatory certainty for cryptocurrencies is critical: In October 2021, the crypto executive purchased a residence in the city.

Dubai, being an emirate within the United Arab Emirates, has its own set of laws and regulations, as well as many "free zones" where people can form firms and apply for business licenses. The Dubai Financial Services Authority, for example, serves as the financial regulator for the Dubai International Financial Center and has developed its own encryption framework.

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