Sheikh Mohammed bin Rashid Al Maktoum, Dubai’s ruler, and vice president, announced the passage of new legislation regulating virtual assets such as cryptocurrencies and NFTs.
For some years, the UAE has been at the vanguard of crypto and blockchain adoption, and it is trying to cement its place as a key global financial hub.
Due to the bill, Dubai seeks to develop an advanced legal framework that protects investors and establishes worldwide standards to manage the virtual asset business.
Dubai’s virtual asset regulatory authority
According to a government statement, the Dubai Virtual Asset Regulatory Authority (VARA) will function as an associated agency of the Dubai World Trade Center.
It will focus on compliance and disclosures of virtual asset service providers in the United Arab Emirates (UAE). The new body will also be in charge of the UAE’s cryptocurrency licensing system.
Only companies with a commercial presence in the UAE will be eligible for these crypto licenses. VARA will oversee the operations of custodians and asset managers in the cryptocurrency field in addition to crypto exchanges.
The statement on Wednesday backs up previous claims that Dubai officials were working on establishing a virtual asset licensing framework by the end of the first quarter.
According to rumors at the time, the expansion was the result of a cooperation between Binance, the world’s largest cryptocurrency exchange, and the Dubai World Trade Center.
Dubai decides to rule crypto sector
The UAE has been wooing the virtual asset business for years, and its banks have a history of experimenting with blockchain technology. But this is the first time the government has made an official attempt to regulate the sector on a large scale.
Since mid-2021, the Financial Centre has been considering virtual asset regulation, although it is still in the consultation stage. The world’s largest cryptocurrency exchange, Binance, is not regulated in the United Arab Emirates, although it is in Bahrain.
The tiny island country surrounded by two oceans is making a serious play for the UAE’s spot as the world’s premier virtual asset hub. Bahrain enacted crypto banking regulations in 2019 and licensed its first cryptocurrency firm.