Dubai establishes virtual asset regulator with announcing new crypto law

Sheikh Mohammed, prime minister and ruler of the United Arab Emirates, has declared a new law on virtual assets as well the establishment of a crypto regulator.

Sheikh Al Maktoum said he had issued a law creating a legal framework for crypto in the Emirate of Dubai planned at protecting investors and "designing much warranted international standards" for industry governance. furthermore, the ruler said a newly formed Dubai virtual Asset Regulatory Authority, or VARA, would have enforcement powers in the Emirate's special development and free zones except for the Dubai International Financial center. 

Sheikh said "Approving the virtual asset law and establishing the Dubai Virtual Asset Regulatory Authority is a vital step that establishes the UAE’s position in this sector, a step that aims to help the sector to grow and protect investors,"

Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the UAE’s position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors. pic.twitter.com/LuNtuIW8FM

— HH Sheikh Mohammed (@HHShkMohd) March 9, 2022

According to Sheikh Al Maktoum, the crypto law will require Dubai residents to register with VARA before engaging in crypto-related activities. Businesses dealing in virtual asset activities must also establish a presence in Dubai. These activities include operating a crypto exchange, conducting transfers of cryptocurrencies, and other services related to offering and trading tokens. 

The announcement did not state which cryptocurrencies would fail under the law but added that VARA would classify and specify the types of virtual assets in addition to setting rules and controls. Anyone found violating the new law could face fines or have their business permit suspended or canceled. The board of directors of the Dubai world trade center will determine the course of action when violations occur.

it's unclear how the legal framework will impact free zones like the Dubai World Trade Centre, which declared in December its aim to become a comprehensive zone and regulator of crypto, products, operators, and exchanges. Binance CEO Changpeng Zhao lauded the creation of Dubai's VARA, saying regulatory clarity for cryptocurrencies was important--The crypto exec purchased an apartment in the city in October 2021. 

As an Emirate within the UAE Dubai largely has its laws and regulations, operating several "free zones" where people can incorporate companies and apply for a trade license. The Dubai International Financial Centre introduced its crypto framework.

Read Legal expert shared insights regarding crypto and blockchain regulations in UAE