In the midst of a cryptocurrency reckoning and reevaluation, Dubai’s crypto industry is experiencing an unprecedented surge. However, this is no coincidence.
Dubai’s recent implementation of the Virtual Assets Framework Law and the establishment of VARA as a regulator for virtual assets on Dubai mainland sends a clear message of Dubai’s aspiration to become a hub for virtual asset-related businesses.
Following through on its mission, VARA recently released its much-anticipated regulations, applicable to virtual asset businesses conducted in Dubai. This solidified Dubai’s position as a force to be reckoned with in the world of crypto.
Expanding Dubai’s Crypto Ecosystem
The highly anticipated regulations from VARA have been eagerly awaited by the rapidly expanding virtual asset ecosystem in Dubai.
These regulations demonstrates the emirate’s commitment to the world of Web3 and establishes a transparent framework for virtual asset service providers seeking to incorporate blockchain or virtual assets into their operations.
VARA’s regulations have a broad scope and encompass all VASPs operating in Dubai, with the exception of the DIFC.
The regulations are designed to establish clear guidelines for the diverse array of digital assets, such as NFTs and utility tokens that are becoming increasingly prevalent.
Additionally, all financial service activities related to the issuance, exchange, or control of a token within Dubai are now subject to VARA’s oversight.
A Look at VARA’s Regulations
VARA’s regulations are composed of 13 distinct rulebooks, with five applying to all VARA-regulated businesses.
These five rulebooks cover fundamental topics such as virtual assets and associated activities, company formation and structure, compliance and risk management, technology and information management, and market conduct.
The remaining rulebooks are tailored to specific activities like broker-dealer services, advisory services, , exchange services, lending and borrowing services and management and investment services.
VARA also established a voluntary registration process for entities that do not fall under the aforementioned categories of regulated services but could still benefit from the supervision of a reputable regulator.
This includes providers of technology services utilizing distributed ledger technology or other businesses and companies actively investing their portfolios in virtual assets.
This move demonstrates VARA’s commitment to promoting a responsible and trustworthy virtual asset industry in Dubai.
It’s anticipated that voluntary registration will be a popular option for businesses operating in the crypto industry, particularly those with innovative business models that don’t fit into traditional categories of financial services recognized by regulators.
Many of these businesses recognize the value of voluntarily submitting to regulation, as it provides assurance to investors and counterparties that they are dealing with a regulated entity subject to the supervision of a reputable virtual assets regulator.
This trend highlights the growing importance of responsible regulation in the virtual asset industry and the increasing demand for clear regulatory frameworks.