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The United Arab Emirates (UAE) is drawing up the final piece of its grand plan to regulate the local digital currency industry, urging companies across the country to seek registration with its regulator.
Securities and Commodities Administration (SCA) Announce All Virtual Asset Service Providers (VASPs) in the UAE are required to submit a license application to the agency upon approval by the Authority’s Board of Directors. New regulations passed by the government put the SCA in charge of regulating digital currencies in the country.
VASPs operating outside the UAE Free Zones, such as Abu Dhabi Global Market (ADGM), which is not expected to comply with the new requirements. Additionally, companies based in Dubai do not need to apply for a license from the SCA. Instead, they need to seek consent from the city’s Virtual Assets Regulatory Authority (VARA).
According to the UAE Resolution No. 111 of 2022, the activities requiring SCA license include the provision of virtual asset platform operation services and all brokerage services involved digital currency. Others include the provision of digital currency transfers, custody and management services, and the central bank has the power to modify these activities.
In a press release, the SCA noted that its activities primarily involve transactions for investment purposes rather than payments. Failure to comply with the new rules could result in criminal investigations, forfeiture of profits and fines of up to $2.7 million.
“Its regulations do not apply to virtual assets used for payment purposes, as they are subject to the jurisdiction of the central bank. They also do not apply to financial free zones,” the SCA said.
Companies applying based on the business model of operating a virtual asset platform are not allowed to trade digital currencies unless the asset has been formally listed by the securities regulator or competent authority, the SCA added.
The future depends on digital assets
The UAE has been brewing ambitions to explore a digital currency for international trade as it plans to move away from the U.S. dollar. Thani Al-Zeyoudi, Minister of State for Foreign Trade, disclosure “Cryptocurrencies will play a big role in the future of UAE trade,” at the World Economic Forum.
In line with its digital asset goals, the country has added a new free trade zone for Web3 companies in the emirate of Ras Al Khaimah.named RAK Digital Asset Oasisthe zone is touted as boosting innovation in the UAE’s fledgling digital currency ecosystem.
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