- Dubai regulatory body issues rules for crypto firms covering exchange services and advertising.
- The penalty for non-compliance is a fine between $5,400 and $54,451.32.
- The issuance of privacy coins is outlawed.
Dubai’s Virtual Assets and Regulatory Authority (VARA) has issued the much anticipated Full Market Regulations for Virtual Assets Services Providers (VASPs). The Dubai digital asset regulator posted about the development on its official website today, February 7, 2023.
The regulations set out a comprehensive virtual asset framework built on principles of economic sustainability and cross-border financial security, addressing global risks of money laundering and terrorist financing.
The report read in part: “With bespoke rules and guidelines designed to provide clarity, assure certainty, and mitigate market risks, VARA seeks to develop a model framework for global economic sustainability within an innovation-centric, borderless, technology agnostic environment, and future-focused.”
By the new rule, no entity can carry out digital assets services in Dubai unless licensed by VARA — although DIFC entities are excluded.
The penalty for non-compliance is a fine between 20,000 and 200,000 AED, equivalent to $5,400 and $54,451.32. Repeat offenders get up to 500,000 AED or a $136,129 fine per offense. Additionally, the issuance of privacy coins is specifically outlawed.
With this regulatory framework Dubai, the most populous of the seven United Arab Emirates (UAE) emirates, aims to become a regional fintech center. Notably, the new crypto framework, which includes advertising and marketing rules, is still awaiting final approval.
After last year’s market catastrophe, regulators rush to establish crypto oversight. A UAE politician told a panel at the 2023 World Economic Forum in January that no crypto businesses had VARA licenses, despite counterclaims by some, including the European arm of now-defunct FTX. The EU, the U.K., South Korea, and other countries are also drafting their licensing regimes.
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