Dubai releases full market regulations for virtual assets service providers

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Dubai’s primary digital assets regulator has rolled out guidelines for the operations of virtual currency service providers in the region, a year after its creation.

Dubai-based virtual assets attorney Irina Heaver announced via Twitter that the Emirate’s Virtual Asset Regulatory Authority (VARA) had issued the long-awaited rules for industry service providers. The rules, titled “Full Market Product Regulations,” comprises four main rule books and another set focusing on specific industry operations like brokerages and custody services.

⚠️Dubai News

Dubai's Vurtual Assets and Regulatory Authority issued the long-awaited Full Market Regulations for Vurtual Assets Services Providers (VASPs).

— Irina ₿. Heaver (@IrinaHeaver) February 7, 2023

Under the rules, all entities looking to offer virtual currency services in Dubai must obtain a license from VARA. The rules cover services related to marketing, advertising, and promotions regulations, with penalties for first-time offenders hovering between 20,000 dirhams ($5,500) and 200,000 dirhams ($55,000) in fines.

The rules provide a stiff fine of 500,000 dirhams ($135,000) for repeat offenders of VARA’s new regulations, payable for each offense. Heaver pointed out that the move is a win for all parties involved in the local virtual currency ecosystem as it offers clarity to industry participants.

“Regulatory certainty is very good for business. It is good for consumers, investors and for the Emirate of Dubai. The regulations are long-awaited and mostly welcomed,” Heaver said.

According to the rules, the issuance of privacy coins is banned, while individuals with trading capital exceeding $250 million are urged to seek registration with VARA. On the flip side, lawyers and other selected professionals are exempt from the registration requirements imposed by the new rules.

License and supervision fees have been pegged at $27,000 and $54,000 for market participants. While the VARA has wide powers regarding the interpretation and application of its rules, firms under the Dubai International Financial Centre are not subject to it.

Dubai—The rising Phoenix in the Gulf

Dubai has not hidden its intention to be the leading hub for virtual currencies in the Middle East through the launch of several policies. The first statement of intent was the passage of a robust legal framework that created VARA and introduced a new licensing regime for operators.

Dubai has also been at the fore in terms of metaverse development, with VARA setting up a virtual headquarters in the Sandbox and the government unveiling plans to create 40,000 metaverse jobs by 2030.

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