Sheikh Mohammed approves law regulating digital assets in Dubai

Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has issued the Dubai Virtual Asset Regulation Law to establish a legal framework to protect investors and and implement international standards for virtual assets (VA) industry governance.

The law is applicable throughout the emirate, including special development zones and free zones, except for the Dubai International Financial Centre (DIFC).

By way of the law, a Dubai Virtual Asset Regulatory Authority (VARA) shall be established. VARA will further be responsible for licensing and regulating the sector across Dubai mainland and freezone territories (excluding DIFC). The authority has legal personality and financial autonomy and will be linked to the Dubai World Trade Centre Authority (DWTCA), according to state news agency WAM.

The new law defines the activities subject to VARA authorisation as follows:
– Operating and managing virtual assets platforms services

– Exchange services between virtual assets and currencies, whether national or foreign

– Exchange services between one or more forms of virtual assets

– Virtual asset transfer services

– Virtual asset custody and management services

– Services related to the virtual asset portfolio

– Services related to the offering and trading of virtual tokens

The acts that constitute a violation of the provisions of this law, and the fines imposed on a violator, shall be determined by a decision issued by the board of directors of the Dubai World Trade Centre. For those found in breach of the law, in addition to a fine, VARA may take any of the following measures against the violator: suspend the permit for a period not exceeding six months, cancel the permit, and coordinate with the competent commercial licensing authority in the emirate to cancel the commercial license.

Today, we approved the virtual assets law and established the Dubai Virtual Assets Regulatory Authority. A step that establishes the UAE’s position in this sector. The Authority will cooperate with all related entities to ensure maximum transparency and security for investors. pic.twitter.com/LuNtuIW8FM

— HH Sheikh Mohammed (@HHShkMohd) March 9, 2022

Some of the key tasks of VARA will be to organise issuing and trading of virtual assets and virtual tokens, organizing and authorising virtual asset service providers, ensuring personal data protection of beneficiaries, organizing VA platrforms and portfolios and monitoring transactions and preventing price manipulation of virtual assets.

Helal Saeed Al Marri, director General of DWTCA, said that VARA will provide a full range of VA services in coordination with the Central Bank of the UAE and the Securities and Commodities Authority and will also serve as the central custodial authority for virtual assets.

The law, which comes into force from the date of its publication in the Official Gazette, also stipulates that the VARA is mandated with organising and setting the rules and controls that govern the conduct of VA activities, including management services, clearing and settlement services, in addition to classifying and specifying types of virtual assets.

By way of the new law, it is prohibited for any person in the Dubai to engage in related activities without VARA authorisation. Also, those wishing to practice any of the VA activities must establish a presence in Dubai to conduct their business.

“Approving the virtual asset law and establishing the Dubai Virtual Asset Regulatory Authority is a vital step that establishes the UAE’s position in this sector a step that aims to help the sector to grow and protect investors,” said Sheikh Mohammed bin Rashid.