Dubai establishes virtual assets regulator and announces new crypto laws

Sheikh Al Makturm, Prime Minister and ruler of the United Arab Emirates, announced a new law on virtual assets and the establishment of a crypto regulator.

In an announcement on Wednesday, Sheikh Al Maktoum said he had issued a law to create a legal framework for cryptocurrencies in the emirate of Dubai, aimed at protecting investors and "designing very well-founded international standards" for industry governance. In addition, he said the newly established Dubai Virtual Asset Regulatory Authority (VARA) will have enforcement powers in the emirate's special development areas and free zones outside the Dubai International Financial Center.

“The approval of the Virtual Assets Law and the establishment of the Dubai Virtual Assets Authority are important steps in establishing the UAE’s position in the industry, aiming to help the sector grow and protect investors,” Sheikh said.

According to him, the crypto law will require Dubai residents to register with VARA before engaging in crypto-related activities. Businesses engaging in virtual asset activities will also have to establish a presence in Dubai. These activities include operating cryptocurrency exchanges, performing cryptocurrency transfers, and other services related to offering and trading tokens.

The announcement did not specify which cryptocurrencies will be subject to the law, but added that VARA will classify and specify the types of virtual assets in addition to setting rules and controls. Anyone found violating the new law could face fines or have their business license suspended or revoked. The Dubai World Trade Center's board of directors will decide on the course of action when violations occur.

It is unclear how this legal framework will affect free zones such as the Dubai World Trade Center, which announced plans in December to become an integrated zone and regulator for cryptocurrencies, products, operators and exchanges.

Binance CEO Changpeng Zhao praised the creation of Dubai’s VARA, saying that regulatory clarity for cryptocurrencies is important.

As an emirate of the United Arab Emirates, Dubai largely has its own laws and regulations and operates multiple “free zones” where people can register companies and apply for trade licenses. For example, the Dubai Financial Services Authority serves as the financial regulator for the Dubai International Financial Centre and has launched its own crypto framework.

Sheikh Al Makturm stressed that Dubai will be a key player in designing the future of virtual assets in the world. He pointed out that Dubai has all the capabilities to make it one of the most important global centers in the field of virtual assets, especially the advanced legislative environment.

"Today, we are taking part in designing the future of virtual assets around the world. Dubai will provide a state-of-the-art virtual asset ecosystem in terms of organization, governance and security," he said.

The Dubai Virtual Assets Regulatory Authority will work with the UAE Central Bank and the Securities and Commodities Authority to provide a full range of virtual asset services. The law will come into effect from the date of publication in the Official Gazette.