Virtual Assets law’s (VAL) regulation was issued by Dubai and also established the Dubai Virtual Assets Regulatory Authority in March, which aims to establish a legal framework for business in the virtual assets space.
Virtual Assets Law was issued on 28th February 2022 and came into effect on 11th March 2022. The purpose for the same was for regulating virtual assets in the Emirate of Dubai. Law no. 4 of 2022 (Dubai Virtual Assets Law) balances the need for business growth vis-à-vis the virtual assets, with the need for the regulation.
A legal framework for investors and businesses is created by VAL alike invoked in virtual assets in Dubai. Fungible tokens like cryptocurrencies are covered, as well as non-fungible tokens (NFTs). We can also say it as digital representations of value which can be traded, transferred, or used as a form of payment. The main objective of this law is to establish the position of Dubai and the United Arab Emirates (UAE) as key global players in designing the future of virtual assets.
Virtual Assets Regulatory Authority (VARA) is established by VAL which is an independent regulatory body that sits within the Dubai World Trade Center (DWTC). The DWTC Authority is launching the application process for ‘Regulated Virtual Asset Business Licenses’ coordinating with VARA.
It has different regulatory frameworks and the authority has been established for the same.
- VARA will soon circulate and notify that a list of virtual assets, business practices, services, and products are prohibited in UAE.
- Also, KYC/AML regulations and other regulations on monitoring the activities of virtual assets service providers may be further notified by VARA.
- VARA may prescribe a code of professional ethics for the virtual asset service provider.
- VARA may create rules regarding the classification and identification of types of virtual assets and virtual tokens. They can also create the standards for dealing with them.
- VARA website will further publish the implementing regulations that will follow the law.
In the UAE’s vision, the introduction of the Virtual Asset Law is a positive step. The step is to be the global hub for digital assets and blockchain technology. The advantage of the Virtual Asset regime is now soon taken by the businesses and set up in the ever-welcoming and booming emerging digital technology market in UAE.
Also, VAL explicitly states that any person or legal entity that offers virtual asset services to consumers and businesses in Dubai can only do it if VARA has granted the permission, then it operates in Dubai and has a trade license from a relevant commercial authority in Dubai. There is a piece of good news for potential investors and entrepreneurs operating in the space that VARA are taking a proactive approach to issue approvals.
In Dubai, there is an express prohibition on any person engaging in certain activities which fall under VARA’s scope without VARA’s prior authorization which fall under VAL. The activities are:
- Virtual Asset platform operation and management services.
- Transfer virtual asset services.
- Exchange services between one or more forms of virtual assets.
- Whether national or foreign, exchange between virtual assets and currencies.
- Custody and management virtual asset services.
- Services related to virtual assets portfolio.
- Services related to the offering and trading of virtual tokens.
UAE has taken the pioneering steps to establish laws and regulations for the Virtual asset industry, which will allow the industry to grow immensely within the regulatory framework.
