Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai recently disclosed that Dubai is all set to adopt its first law which regulates virtual assets inclusive of cryptocurrencies. The Dubai Virtual Asset Regulation Law is formulated to create a progressive legal framework for the protection of investors as well as to furnish them with global standards for virtual asset transactions. Sheikh Mohammad also added that the move will foster responsible business growth in the Emirate.
Mohammad Bin Rashid expressed the importance of the latest regulations via his Twitter handle, saying,
“We established an independent authority to oversee the development of the best business environment in the world for the virtual assets in terms of regulation, licensing, governance and in line with local and global financial systems. The future belongs to whoever designs it … and today, through the virtual assets law, we seek to participate in the design of this new and rapidly growing global sector.”
As per the new law, the nodal authority will work in cooperation with all related entities to guarantee complete transparency and safety for investors. The government of the country is taking firm steps to institute a strong digital economy as well as to ensure proper utilization of the advantages that come up with digital transformation.
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Digital economy makes a considerable contribution of approximately 4.3 per cent to the UAE’s GDP. For better understanding, the aforementioned percentage amounts equivalent to around Dh100 billion, as per the figures issued by the government.
The legislation will also establish the Dubai Virtual Asset Regulatory Authority (VARA). The governmental body will superintend the sphere of virtual assets throughout the Emirate, which will also cover special development zones and free zones. The Dubai International Financial Centre is kept out from VARA’s supervision.
VARA will also do all the licensing work, along with enjoying legal and financial autonomy. Further, the authority will operate in connection with the Dubai World Trade Centre Authority (DWTCA).
Helal Al Marri, the director general of the DWTCA, commented on the significance of the virtual assets legislation, saying,
“The new law and establishment of VARA will enhance the UAE and Dubai’s position in the virtual asset sector and attract leaders from around the world,”
The legislation will effective from the date of its publication in the Official Gazette. The law will define all the duties of Virtual Asset Regulatory Authority, which will monitor, superintend as well as control virtual asset services and processes.
Powers conferred on Virtual Asset Regulatory Authority:
The law will clearly mention all the activities that are to be conducted by VARA. The duties are as follows:
- Monitoring and regulating virtual assets platforms services
- Swapping of services between virtual assets and currencies, both for national and foreign
- Give and take of services between one or more forms of virtual assets
- Services for the transfer of virtual assets
- Virtual asset custody and management services
- To control and manage all the services linked to the virtual asset portfolio
- Services associated with the offering and trading of virtual tokens
The act also includes the strict provisions against the violator of the law. The penalties to be imposed will be determined by the board of directors of the DWTC. Besides imposing fines, VARA is also empowered to suspend permits for a period of up to six months. In addition, the authority can even cancel the permit altogether.
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If needed, the body can also coordinate with the competent commercial licensing authority of Dubai for the cancellation of the commercial licence of violators.
The legislation will also prohibit any person of the Emirates to participate in virtual assets transactions without the authorization of VARA. On the other hand, any person who wishes to carry out virtual asset activities in Dubai must prove their presence in the country in order to conduct their business.
