The emerging digital economy is expected to heavily rely on digital assets, including various ventures such as cryptocurrency. The UAE is establishing itself as a prominent destination for crypto entrepreneurs, with specific areas designated for conducting cryptocurrency-related operations. In this article, we outline essential recommendations for individuals considering investing in cryptocurrencies and starting a crypto business in Dubai.
Obtaining a crypto license in Dubai opens up a world of opportunities for investors looking to venture into the futuristic financial sector of cryptocurrency. This license provides access to a thriving market where innovative business models and cutting-edge technology converge to offer promising investment opportunities. Whether you are an individual or a business entity, a crypto license in Dubai provides the necessary legal framework to participate in the growth and development of this exciting new industry. With a supportive regulatory environment and a commitment to fostering innovation, Dubai is positioning itself as a leading hub for the crypto industry, making it an attractive destination for those looking to make their mark in this rapidly evolving sector.
To enter the crypto industry in Dubai, you can apply for a crypto license in free zones or via a representative office in Dubai. The permitted business activities include database management, self-proprietary investments, consultancy, and data mining. However, launching an ICO or registering a crypto exchange must be regulated by a competent authority. Starting a crypto business in Dubai can be a lucrative opportunity, as the city has become a hub for fintech and innovation in recent years, but it’s crucial to be aware of the regulations and guidelines in place to ensure a smooth launch.
“The Dubai government’s strategy is highly commended for enabling the expansion of the crypto industry and openly expressing their backing for regulation, making this field accessible to a wider range of people.”
Things to take into account before launching your cryptocurrency business in Dubai:
Crypto-related ventures, including representative offices, data mining firms, and consultancies, are monitored and regulated by Virtual Assets Regulatory Authority (VARA) under the Dubai World Trade Centre (DWTC). If you want to understand the legality of your crypto business in Dubai, it’s best to get in touch with the regulatory authority.
To establish a cryptocurrency business in Dubai International Financial Centre (DIFC), the company must have a minimum of 5 years of legal experience in the cryptocurrency field in another country. The best way to incorporate such a company is through a representative office in Dubai. Dubai Multi Commodities Centre (DMCC) offers a unique self-proprietary cryptocurrency license, allowing you to invest in Crypto Assets. If you want to open a data-mining firm for your crypto-related business in Dubai, you can do so by applying for an IT company trading license and obtaining additional consent for your cryptocurrency business if needed. Cryptocurrency business owners can also establish a consultancy enterprise in Dubai.
Benefits of establishing a cryptocurrency business in Dubai:
Today’s consumers are always seeking out companies that accept cryptocurrencies for their transactions. This sets your business apart from the competition and can attract a wider audience to your products and services. One of the biggest benefits of blockchain transactions is the absence of gateway or service charges, leading to lower transactional costs for your company.
Additionally, there are no cross-border barriers when making cryptocurrency transfers. Blockchain is a decentralized payment system with advanced encryption capabilities, allowing for secure crypto transactions from anywhere in the world with consistent encryption standards.
“Your crypto business plan should detail your organization’s objectives, tactics, and the actions you will undertake to ensure adherence to the DFSA’s regulations.”
Steps to set up Crypto Business in Dubai:
•Conduct market research: Before launching your crypto business, it’s important to have a clear understanding of the local market and competition. Conduct thorough research on the demand for crypto services in Dubai and the existing players in the market.
•Obtain the necessary licenses: Dubai’s regulatory authority, Dubai Financial Services Authority (DFSA), has specific guidelines in place for crypto businesses. To operate in the city, you’ll need to obtain the necessary licenses and approvals from the DFSA. This can include a license for the provision of crypto-asset services, such as trading, custody, and issuance.
•Develop a compliant business plan: Your business plan should outline your company’s goals, strategies, and the measures you’ll take to ensure compliance with the DFSA’s regulations. This can include measures for safeguarding customer assets, anti-money laundering (AML) procedures, and data protection protocols.
•Secure funding: Starting a crypto business can require significant capital, so you should secure adequate funding from investors, either through venture capital or through an initial coin offering (ICO).
•Build a strong team: A strong and experienced team is key to the success of any crypto business. Consider hiring professionals with expertise in the crypto industry, including traders, developers, and compliance experts.
•Launch your platform: Once you’ve completed the necessary steps, you can launch your crypto platform. This can include developing a website, building a trading engine, and integrating various payment gateways to facilitate transactions.
How to obtain a cryptocurrency licence in Dubai:
The Dubai Financial Services Authority (DFSA) is responsible for regulating and supervising the crypto industry in the Emirate. The authority has set out clear guidelines and requirements for obtaining a crypto license, including having a physical presence in Dubai and meeting specific security and operational standards.
To apply for a crypto license, you will need to submit a detailed business plan that outlines the nature of your business, the types of crypto assets you will be dealing with, and the measures you have in place to secure client assets. You will also need to provide information about your company’s management and ownership structure, as well as information about any prior experience in the crypto industry.
The cost of obtaining a crypto license in Dubai typically ranges from AED 21,500 to AED 35,000 depending on the nature of the business and the types of crypto assets you plan to deal with. However, it is important to note that these costs may increase depending on the specific activities you plan to engage in.
In addition to the initial costs of obtaining a license, there are also ongoing fees and regulatory requirements that you will need to comply with. These may include annual fees, regular reporting requirements, and regular audits to ensure that you continue to meet the standards set out by the DFSA.
UAE has taken “active” steps to establish itself as a crypto hub:
The UAE has been supportive of the crypto industry and has positioned itself as a crypto hub, as stated by panellists at the AB UAE Forum. The government’s approach is praised for allowing the growth of crypto and for being vocal about their support for regulation, making the industry accessible to everyone. In last January, the UAE introduced a new regulation and regulatory authority, the Dubai Virtual Asset Regulation Law and the Dubai Virtual Assets Regulatory Authority (VARA), for virtual assets and service providers at the federal level. The purpose of this regulation is to oversee the growth of the virtual asset business environment and ensure regulation, governance, and licensing.
The need for regulations in the crypto market was highlighted due to the FTX situation, which showed the importance of regulations for building trust in the market. The crypto market is still young and considered to be over-sensationalized, but time is needed for the market to learn and grow.
