Sheikh Mohammed approves law to regulate cryptocurrencies and NFTs

The Dubai Virtual Asset Regulation Law presents an advanced legal framework to protect investors

A Staff Reporter

Published: Wed 9 Mar 2022, 7:13 PM

Last updated: Wed 9 Mar 2022, 7:49 PM

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, approved a first-of-its-kind law to regulate virtual assets in Dubai.

The Dubai Virtual Asset Regulation Law presents an advanced legal framework to protect investors and promote responsible business growth within a virtual asset (VA) Industry governance that implements the highest international standards.

An independent authority, established under Dubai World Trade Center Authority, will oversee the regulation, licensing and governance of virtual assets, non-fungible tokens (NFTs), and cryptocurrencies.

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Taking 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."

He stressed that Dubai possesses all the capabilities that qualify it to be one of the most important global centers in the field of virtual assets, especially the advanced legislative environment. "Dubai will provide the most advanced virtual asset ecosystem in terms of organization, governance and security.”

The law, Sheikh Mohammed noted, presents a vital step that aims to advance the digital sector and protect the rights of investors.

It shall apply to special development zones and free zones throughout the emirate, with the exception of the Dubai International Financial Centre.

The Dubai Virtual Asset Regulatory Authority (VARA) will monitor digital transactions and protect the personal data of users. It will also be responsible for licensing and regulating the sector across Dubai Mainland and Free Zone territories (exclusive of DIFC).

VARA: The industry's competent body

Under the law, it is prohibited for any person in the Emirate to engage in activities without VARA authorization as the competent body in the Emirate to regulate, supervise and control virtual asset services.

The authority is mandated with organizing and setting the rules and controls that govern the conduct of VA activities, including management services, clearing and settlement services, in addition to classifying and specifying types of virtual assets.

People wishing to practice any of the VA activities must establish a presence in Dubai to conduct business.

VARA's main responsibilities include:

Regulating the issuance and release of virtual assets and NFTs
Regulating and licensing virtual assets service providers
Protecting personal data of users and beneficiaries
Regulating and monitoring the platforms offering cryptocurrencies and digital wallets
Monitoring digital transactions
Preventing the manipulation or modification of prices of virtual assets

The activities subject to VARA authorization are:

Operating and managing virtual assets platforms services,
Exchange services between virtual assets and currencies, whether national or foreign,
Exchange services between one or more forms of virtual assets,
Virtual asset transfer services,
Virtual asset custody and management services,
Services related to the virtual asset portfolio,
Services related to the offering and trading of virtual tokens.

Penalties

The acts that constitute a violation of the provisions of this law and its related decisions, and the fines imposed on a violator, shall be determined by a decision issued by the board of directors of the Dubai World Trade Centre.

In addition to the penalty of a fine, the VARA may suspend the permit for a period not exceeding (6) six months, cancel the permit, and coordinate with the competent commercial licensing authority in the Emirate to cancel the commercial license.

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Enhancing Dubai's position globally

The establishment of VARA comes as a part of the strategy of the Dubai Securities and Exchange Higher Committee.

H.E. Helal Saeed Al Marri, Director General of DWTCA, said that the new law and establishing the Authority will enhance the UAE and Dubai’s position in the VA sector and attract VA leaders from all over the world. Al Marri added that Dubai Virtual Asset Regulatory Authority will provide a full range of VA services in coordination with the Central Bank of the UAE and the Securities and Commodities Authority.

Envisioned to anchor the world’s VA market leaders, credible institutional enablers, and innovation facilitators, the authority will serve as the central custodial authority for this specialized industry.