The government expects that a nationwide crypto licensing system will attract big companies to the UAE.
The United Arab Emirates (UAE) is getting ready to start issuing federal licenses to virtual asset service providers (VASPs) by the end of the first quarter, citing an unnamed government official.
The UAE's Securities and Commodities Authority (SCA) is the final stage of amending rules to regulate VASPs. The government expects that a nationwide crypto licensing system will attract big companies to the region.
The country completed a risk assessment of crypto assets late last year. The assessment involved 14 public sector agencies and 16 private sector entities. The government concluded that proper regulation rather than an outright ban can mitigate the risks of cryptocurrencies being used in illegal finance schemes.
The UAE official said that the news outlet that the country's crypto regulation takes into account the latest guidance from the Financial Action Task Force (FATF) as well regulatory strategies used in the U.S, the U.K, and Singapore.
The regulation will take a hybrid approach. The SCA will regulate the crypto industry with input from the central bank. The UAE official said the government also wants to regulate the crypto mining industry.
Few UAE financial free zone has already issued licenses for VASPs in December. Binance signed an agreement with Dubai World Trade Centre Authority to establish a global crypto hub.