Today, Dubai passes a new virtual assets law and establishes the Virtual Assets Regulatory Authority.

  Sheikh Mohammed bin Rashid Al Maktoum, the Emirate of Dubai's ruler and one of the world's wealthiest politicians, has stepped up his efforts to make Dubai the centre of digital assets in Western Asia.

Sheikh Mohammed, who is also the United Arab Emirates' vice president and prime minister, announced the Dubai Virtual Asset Regulation Law today, which is "aimed at creating an advanced legal framework to protect investors" and designing "much-needed international standards for virtual asset industry governance that will promote responsible business growth under prudential regulations.

In addition, the Dubai Virtual Asset Regulatory Authority was formed. The licensor and regulator of the crypto sector in Dubai Mainland and most other Free Zone areas will be this organisation. It will collaborate with the UAE Central Bank as well as the Securities and Commodities Authority.

The Dubai Virtual Asset Regulatory Authority will be in charge of overseeing the issuance and trading of virtual assets, and companies offering crypto services must first acquire approval from the authority. The new regulatory body will "monitor transactions and prevent virtual asset price manipulation," among other things.

The corner Virtual Means Law is an instigative and significant legislative development in Dubai and applies to virtual asset services handed throughout the Emirate of Dubai and Dubai’s special development and free zones(except the Dubai International Finance Centre( “ DIFC ”)). The Virtual Means Law serves as an important step in establishing the Emirate of Dubai’s position in the virtual means sector and will really have important counteraccusations for the unborn geography of virtual means in Dubai. The enactment of the new Virtual Means Law is reflective of the adding interest in virtual means in the United Arab Emirates( “ UAE ”) and the region more generally. 

 

 We set out below the crucial features of the new Virtual Means Law and the counteraccusations for virtual means and affiliated conditioning in the Emirate of Dubai. 

 Crucial Features of the Virtual Means Law 

 

 Establishment of a New Regulatory Authority The Virtual Means Law establishes the Dubai Virtual Means Regulatory Authority( “ VARA ”), a reality combined with the Dubai World Trade Centre Authority( “ DWTC Authority ”), as Dubai’s primary virtual means controller. Under the Virtual Means Law, VARA aims to promote Dubai’s position as an indigenous and transnational destination in the virtual means sphere and to develop Dubai’s digital frugality. VARA further seeks to enhance investment mindfulness of the virtual means sector, attract investment and companies operating in the field of virtual means to establish themselves in Dubai, and give the regulations, rules, and norms necessary to regulate, supervise and control all matters related to virtual means. 

 Entry into Force The Virtual Means Law entered into force on March 11, 2022, which is the date of its publication in the Official Gazette. Any vittles in other legislation which are contrary to, or conflict with, the vittles of the Virtual Means Law are effectively repealed. While the Virtual Means Law is an important first step in the legislative frame for virtual means in Dubai, further explanation and detail are needed. The Director-General of the DWTC Authority is commanded with the responsibility of issuing the opinions necessary to apply the Virtual Means Law, although the precise timeframe for the allocation of similar opinions isn't specified under the Virtual Means Law. 

 

 Compass of the New Law The compass of the Virtual Means Law is extensive, with “ virtual means ” defined astronomically as “ a digital representation of value which can be digitally traded, transferred, or used as an exchange or payment instrument or for investment purposes ”; this, thus, would include cryptocurrencies, commemorative, non-fungible commemoratives and any other virtual asset determined by VARA. 

 Conditioning Subject to Authorization While the Virtual Means Law applies throughout the Emirate of Dubai and the colorful special development and free zones(except the DIFC), it doesn't regulate virtual means services in a civil position. Realities operating in Dubai which fall within the compass of the Virtual Means Law shall be banned from engaging in certain regulated conditioning in Dubai unless authorized to do so by VARA; any permitted conditioning shall later be conducted within the limits of the authorization granted. A broad range of conditioning bear authorization from VARA under the Virtual Means Law, including the operation and operation of a virtual asset platform and the guardianship and operation of virtual means. The Virtual Means Law further clarifies that VARA may establish rules and conditions for the practice of regulated conditioning and may expand the list of conditioning that are subject to the authorization and control of VARA. 

 

 Licensing and On-Going Conditions To gain a license, the Virtual Means Law stipulates that aspirants must establish Dubai as the headquarters for their business and must gain a marketable business license from the applicable licensing authority in Dubai. The specific licensing process and fresh ongoing conditions concerning anti-money laundering, exposure, translucency, and know-your-customer ( “ KYC ”) procedures are anticipated to be set out in the regulations and opinions supplementing the Virtual Means Law. 

 Collaboration with Other Authorities VARA is anticipated to coordinate with the UAE Central Bank to apply measures to insure the protection and stability of the fiscal system, which may lead to an increase in the number of bank deals involving virtual means and the regulation of decentralized finance( “ Defi ”) operations and virtual asset lending, both of which have significantly evolved over recent times. 

 

 Liabilities of the New Regulatory Authority Under the Virtual Means Law, VARA shall have a broad accreditation, including regulating the operation and operation of virtual asset platforms, service providers, and all that relates to virtual means and authorizing exchange services between virtual means and currencies or between one or further forms of virtual means. In addition, under the Virtual Means Law, VARA is assigned with organizing, supervising, and controlling the allocation and immolation of virtual means, together with precluding illegal practices, adding translucency, and developing and enforcing the regulations necessary for the protection of both investors and dealers of virtual means. Indeed, all persons subject to the Virtual Means Law are needed to completely cooperate with VARA, including furnishing the information and documents VARA requires to exercise its powers and achieve its objectives. 

 Penalties and Warrants Under the Virtual Means Law, VARA is permitted to take colorful conduct and measures, including suspending the allocation of authorizations, suspending the conditioning of any virtual asset service provider, and suspending dealings with any virtual means in certain circumstances. A resolution of the Board of Directors of the DWTC Authority shall, in due course, set out the acts that constitute a violation of the vittles of the Virtual Means Law and the corresponding penalties applicable. In addition to any penalty assessed, the Virtual Means Law confirms that VARA may suspend an authorization granted for over six months or may drop the authorization entirely( in addition to coordinating with the competent marketable licensing authority in the Emirate of Dubai to cancel the trade license of the reality). The implicit warrants for violation of the Virtual Means Law may thus be significant and have wide-ranging impacts. 

 The Broader Landscape 

 

 The Virtual Means Law comes at a reasonable time for the UAE, which is the Middle East’s third-largest crypto request, with a sale volume of roughly$ 26 billion, running Turkey and Lebanon. In agreement with the UAE’s accreditation to grease business while furnishing applicable investor protections, there have been colorful other recent developments in the regulation of virtual means. For illustration, in February 2022, it was reported that the civil Securities and Commodities Authority( “ SCA ”) is amending legislation to allow virtual asset service providers to set up in the UAE. Also, the Financial Services Regulatory Authority( “ FSRA ”) of the Abu Dhabi Global Market( a fiscal free zone in the Emirate of Abu Dhabi) has issued crypto exchange licenses to several companies. In addition, as of November 2021, three companies were witnessing FSRA’s blessing process and colorful other companies( which include providers of guardianship services to investors) were in the process of establishing operations. In March 2021, the Dubai Multi Commodities Centre( “ DMCC ”), the largest free zone in the UAE, set up a nonsupervisory frame for crypto enterprises in collaboration with the SCA. The recent enactment of the Virtual Means Law together with these developments, and several others, reflect the ever-growing interest in virtual means in the UAE. 

 We continue to cover developments in thisarea. However, please communicate with any member of our UAE commercial platoon 

 If you have questions regarding the recent developments or how they could apply to your current or unborn business. 

 Wael Jabsheh 

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Rizwan Kanji 

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Syed Muhammad Rizvi 

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 Sahar Abas 

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 Ivan Muzraev 

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