UAE Close To Issuing New Regulatory Framework For Crypto Firms, Says Regulator

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UAE Close To Issuing New Regulatory Framework For Crypto Firms, Says Regulator

The Securities and Commodities Authority (SCA) has stated that the United Arab Emirates (UAE) is moving closer to providing a regulatory and supervisory framework that will control the country’s virtual asset business.

The Securities and Commodities Authority (SCA), a UAE securities regulator, has stated that it is close to “issuing the regulatory and supervisory framework related to virtual assets issued for investment purposes.”

UAE Regulator To Create For VASPs

The Securities and Commodities Authority (SCA) stated in a statement that it consulted “concerned authorities” throughout the establishment of the regulatory framework that handles the risks of money laundering and terrorism financing associated with “virtual assets and virtual asset service providers (VASPs).” The statement continues, “Such consultations have been concluded.”

Meanwhile, the regulator stated that the framework was created to ensure that the country’s crypto industry follows the recommendations of the Financial Action Task Force (FATF). As a result, regulated exchanges are able to “apply for a license for virtual assets exchange subject to the Authority’s approval and compliance with all of the Authority’s regulations and procedures.”

Applicants from the two financial free zones, the Abu Dhabi Global Market (ADGM) and the Dubai International Financial Centre (DIFC), are exempt from this rule.

Sheikh Al Maktoum announced on Wednesday that he had issued a law in the Emirate of Dubai providing a legal framework for cryptocurrency, with the goal of protecting investors and “designing much-needed international standards” for industry governance.

A newly constituted Dubai Virtual Asset Regulatory Authority, or VARA, would also have enforcement powers in the Emirate’s special development and free zones, with the exception of the Dubai International Financial Centre, according to the ruler.

The Dubai Virtual Assets Regulatory Authority (VARA), a regulatory body, will oversee the development of the virtual asset business environment in terms of regulation, licensing, and governance.

The proposed regulation will force residents of Dubai to register with VARA before engaging in crypto-related activity. Businesses that deal with virtual assets would also need to register. Bitcoin exchanges, businesses that facilitate cryptocurrency transfers, and so on are examples of these businesses.

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Regulation To Follow AML And Anti Terror Financing Laws

As regional economic competition heats up, the UAE, the region’s financial hub, has been pushing for the development of virtual asset regulation in order to attract new types of industry. It has also strengthened laws in recent years to combat its reputation as a haven for illicit money.

The SCA’s announcement on the anti-money laundering and terrorist financing risk framework comes after the Financial Action Task Force (FATF) added the UAE to its “grey” list of jurisdictions that are subject to greater scrutiny on Friday.

ETH/USD trades at $2,600. Source: TradingView

Furthermore, VASPs with commercial licenses who provide any virtual asset services must “apply to the Authority to obtain the necessary license to practice such activity,” according to the SCA.

These individuals must also “confirm” their commitment to comply with all anti-money laundering rules, according to the statement.

While the SCA welcomes all entities’ cooperation and involvement, it warned that any violation of the aforementioned regulatory and supervisory framework will result in the authority taking legal and supervisory action.

Related article | Binance CEO Weighs In On Crypto Regulation, Dubai, And Crypto Ad-Ban

It’s unclear how the legal framework will affect free zones like the Dubai World Trade Centre, which stated in December that it would become a complete zone and regulator for cryptocurrency, products, operators, and exchanges.

Binance CEO Changpeng Zhao praised the establishment of VARA in Dubai, adding that regulatory certainty for cryptocurrencies was critical - Zhao bought an apartment in the city in October 2021.

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Source: UAE Close To Issuing New Regulatory Framework For Crypto Firms, Says Regulator