Taking a big leap in the adoption of cryptocurrency and NFTs in the Middle East region, Dubai has released a law that will regulate crypto.
The first-of-its-kind law that regulates virtual assets was signed by Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai. The law will not only regulate coins but also non-fungible tokens (NFTs).
Talking to Twitter, Sheikh Mohammed bin Rashid said, ” The future belongs to those who design it. Through the virtual asset law, we aspire to participate in shaping the future of this ever-evolving sector.”
The Dubai Virtual Asset Regulation Law will provide an advanced legal framework that will protect investors and promote responsible business growth within a virtual asset (VA) Industry governance that implements the highest international standards.
Cryptocurrency has become very popular in the past two to three years, as more and more citizens are moving towards it to gain financial freedom.
People who have joined the crypto bandwagon say, the majority of governments are mulling that crypto/virtual assets can be an alternative to the banking & financial sectors.
Decentralized finance (DeFi) has become very popular, as it offers more than any bank or financial institution offers them today.
The Dubai government has established a new independent authority under the Dubai World Trade Center Authority that will oversee the regulation, licensing, and governance of virtual assets, non-fungible tokens (NFTs), and cryptocurrencies.
Stressing on the importance of crypto, Sheikh Mohammed bin Rashid said that Dubai has all the qualities to become a global center for virtual assets.
VARA (Dubai Virtual Asset Regulatory Authority), a new competent authority has been set up, which will monitor all digital transactions as well as protect the personal data of users. VARA will also be responsible for licensing and regulating the crypto sector across Dubai Mainland and Free Zone territories (exclusive of DIFC).
VARA: The industry’s competent body
According to Emirati law, it is prohibited for anyone to engage in any activity without authorization from VARA, since VARA is the entity responsible for regulating, supervising, and controlling virtual asset services.
VARA has been mandated to set up rules and control virtual assets activities like crypto management, crypto clearing & settlement service, apart from classifying what type of assets the project is.
People who want to practice any of those VA activities must establish a presence in Dubai to conduct business.
VARA NFT responsibilities
VARA will:
- regulate the issuance and release of virtual assets and NFTs;
- regulate and provide a license to all virtual assets service providers;
- protect personal data of users and beneficiaries;
- regulate and monitor the platforms offering cryptocurrencies and digital wallets;
- monitor all digital transactions;
- prevent any manipulation or modification of prices of virtual assets.
VARA NFTs authorizations
VARA has been authorized to:
- operate and manage virtual assets platforms services;
- check exchange services between virtual assets and currencies, whether national or foreign;
- look after the exchange services between one or more forms of virtual assets;
- check virtual asset transfer services, asset custody, and management services;
- and check services related to the virtual asset portfolio as well as services related to the offering and trading of virtual tokens.
Penalties
The new law also mandates VARA to impose penalties for any violation of the provisions of this law.
The fines imposed on a violator shall be determined by a decision issued by the board of directors of the Dubai World Trade Centre, the Dubai authority said.
In addition to the penalty of a fine, the VARA has also the mandate to suspend the permit of any company for a period not exceeding six months, cancel the permit, and coordinate with the competent commercial licensing authority in UAE to cancel the commercial license.
Pushing for a global NFTs position
With this law, Dubai is now looking to push itself as a new hub for cryptocurrency. In this regard, Helal Saeed Al Marri, Director General of Dubai World Trade Centre Authority (DWTCA) said that the new law will enhance the UAE as a new hub for development in this region.
Adding further he said that VARA will provide a full range of VA services in coordination with the Central Bank of the UAE and the Securities and Commodities Authority.
By unveiling a law that regulates crypto and NFTs, Dubai has taken a lead in the adoption of crypto. This will be a game-changer for all the crypto companies looking to set up a base and are looking for an alternative other than Europe, the US, and Singapore.
