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Wednesday, March 22, 2023

Dubai Publishes Complete Market Regulations for Virtual Asset Service Providers

Dubai Publishes Complete Market Regulations for Virtual Asset Service Providers

Dubai’s main digital asset regulator has launched operating guidelines for virtual currency service providers in the region, a year after its establishment.

Dubai-based virtual asset lawyer Irina Heaver announced via Twitter that the UAE’s Virtual Asset Regulator (VARA) released long-awaited rules for industry service providers. The rules, called “Marketwide Product Regulation,” include four main rulebooks and another set focused on industry-specific operations such as brokerage and custody services.

According to the rules, all entities wishing to provide Virtual currency Services provided in Dubai must be licensed by VARA. The rules cover services related to marketing, advertising and promotion regulations, with fines ranging between AED 20,000 (US$5,500) and AED 200,000 (US$55,000) for first-time offenders.

The rules stipulate a fine of 500,000 dirhams ($135,000) for repeated violations of VARA’s new regulations, to be paid for each violation. Heaver noted that the move is a win for all parties involved in the native virtual currency ecosystem as it provides clarity to industry players.

“Regulatory certainty is very good for business. It’s good for consumers, investors and the emirate. These regulations are long-awaited and mostly welcome,” Heaver said.

Under the rules, the issuance of privacy coins is prohibited, while individuals with trading capital exceeding $250 million are urged to seek registration with VARA. Attorneys and other selected professionals, on the other hand, are exempt from the registration requirements imposed by the new rules.

The licensing and monitoring fees for market participants are $27,000 and $54,000, respectively. While VARA has broad powers in the interpretation and application of its rules, DIFC-owned companies are not bound by it.

Dubai – the rising phoenix of the Gulf

Dubai has not hidden its intention to become the leading hub for virtual currencies in the Middle East by rolling out several policies. The first statement of intent was the adoption of a strong legal framework that created VARA and introduced a new licensing regime for operators.

Dubai is also at the forefront of Metaverse development, with VARA setting up a virtual headquarters in The Sandbox and the government unveiling plans to create a virtual universe 40,000 Metaverse work to 2030.

Watch Marhaba: BSV in the Middle East

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