Sheikh Mohammed issues law to regulate virtual assets in Dubai

Gulf Today, Staff Reporter

His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister, issued the Dubai Virtual Asset Regulation Law aimed at creating an advanced legal framework to protect investors and designing much-warranted international standards for virtual asset (VA) industry governance that will promote responsible business growth, under prudential regulations.

Under the law, the provisions of which are applicable throughout the Emirate, including special development zones and free zones, except for the Dubai International Financial Centre, the Dubai Virtual Asset Regulatory Authority (VARA) shall be established. The authority has legal personality and financial autonomy and will be linked to the Dubai World Trade Centre Authority (DWTCA).

Sheikh Mohammed confirmed that Dubai will be a key player in designing the future of virtual assets in the world.

"Today, we are participating in designing the future of virtual assets globally," he said, noting that Dubai possesses all the capabilities that qualify it to be one of the most important global centres in the field of virtual assets, especially the advanced legislative environment.

"Dubai will provide the most advanced virtual asset ecosystem in terms of organisation, governance and security.

"Approving the virtual asset law and establishing the Dubai Virtual Asset Regulatory Authority is a vital step that establishes the UAE’s position in this sector a step that aims to help the sector to grow and protect investors," he added.

The Dubai Virtual Asset Regulatory Authority will be responsible for licensing and regulating the sector across Dubai Mainland and Free Zone territories (exclusive of DIFC).

The establishment of the Dubai Virtual Asset Regulatory Authority comes as a part of the strategy of the Dubai Securities and Exchange Higher Committee.

Helal Saeed Al Marri, Director-General of DWTCA, said that the new law and establishing the Authority will enhance the UAE and Dubai’s position in the VA sector and attract VA leaders from all over the world.

He added that Dubai Virtual Asset Regulatory Authority will provide a full range of VA services in coordination with the Central Bank of the UAE and the Securities and Commodities Authority.

Envisioned to anchor the world’s VA market leaders, credible institutional enablers, and innovation facilitators, the Dubai Virtual Asset Regulatory Authority will serve as the central custodial authority for this specialised industry.

The law, which comes into force from the date of its publication in the Official Gazette, defines the tasks and competencies of the Authority, which is considered the competent body in the Emirate to regulate, supervise and control virtual asset services.

The law also stipulates that the authority is mandated with organising and setting the rules and controls that govern the conduct of VA activities, including management services, clearing and settlement services, in addition to classifying and specifying types of virtual assets.

According to the law, it is prohibited for any person in the Emirate to engage in activities without VARA authorisation. The person wishing to practice any of the VA activities must establish a presence in Dubai to conduct business.

The law defines the activities subject to VARA authorisation as follows: - 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 The acts that constitute a violation of the provisions of this law and its related decisions, and the fines imposed on a violator, shall be determined by a decision issued by the board of directors of the Dubai World Trade Centre.

In addition to the penalty of a fine, the VARA may take any of the following measures against the violator: to suspend the permit for a period not exceeding six months, cancel the permit, and coordinate with the competent commercial licensing authority in the Emirate to cancel the commercial license.