Dubai approved law to regulate Crypto And NFTs

March 11, 2022
Uncategorized

Digital currencies are getting popular by the day and people have really started adapting them. This caused a little concern as there were no hard laws to regulate these digital currencies which means that it was very hard to protect investors. This all changed when Dubai approved a new law that will regulate virtual assets. This new law will include non-fungible tokens (NFT), virtual assets, and cryptocurrencies.

A new independent authority Virtual Asset Regulatory Authority (VARA) will be established under Dubai World Trade Center Authority (DWTCA) and this independent authority will regulate, license, and govern non-fungible tokens (NFT), virtual assets, and cryptocurrencies.

Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai said on Twitter “The future belongs to those who design it. Through the virtual asset law, we aspire to participate in shaping the future of this ever-evolving sector”  

As Sheikh Mohammed bin Rashid Al Maktoum noted “Dubai will provide the most advanced virtual asset ecosystem in terms of organization, governance, and security.” This law is focused on making Dubai the main hub of the (VA) virtual asset making sure that Dubai has the perfect environment for businesses to grow and thrive in this new age of digital currencies. 

Dubai Virtual Asset Regulatory Authority (VARA)

It will be responsible for the monitoring of the digital transactions and protecting the sensitive information or the users like their personal information. Along with the monitoring VARA will also be regulating this sector across both Dubai Mainland and Free Zone territories (exclusive of DIFC).

This law makes it illegal for any person to engage in activities without the VARA authorization. It should be noted that if one wants to participate in the virtual assets (VA), then they have to establish their presence in Dubai to conduct their business.

VARA responsibilities

  • Regulating the issuance and release of virtual assets and NFTs;
  • Regulating and licensing virtual assets service providers;
  • Protecting personal data of users and beneficiaries;
  • Regulating and monitoring the platforms offering cryptocurrencies and digital wallets;
  • Monitoring digital transactions;
  • Preventing the manipulation or modification of prices of virtual assets

Activities subject to VARA authorization

  • Operating and managing virtual assets platforms services;
  • Exchange services between virtual assets and currencies, whether national or foreign;
  • Exchange services between one or more forms of virtual assets;
  • Virtual asset transfer services;
  • Virtual asset custody and management services;
  • Services related to the virtual asset portfolio;
  • Services related to the offering and trading of virtual tokens.

Penalties for violating VARA

Board of directors of the Dubai World Trade Centre will determine the Penalties for violating VARA.

In addition to the fine, VARA can suspend the permit for a maximum of 6 months, cancel the permit and coordinate with the competent commercial licensing authority in the Emirate to cancel the commercial license.