Cryptocurrency Service Suppliers Licensing Begins in UAE

UAE Introduces Laws to Promote the Sector of Digital Assets
In compliance with Decision No. 111, which was released on June 12, 2020 by the UAE Cabinet and gives the SCA the authority to make decisions and licence providers of digital asset services (VASPs), the Securities and Commodities Authority (SCA), which regulates the financial markets in the United Arab Emirates (UAE), has started to accept licence applications for cryptocurrency providers. This marks a significant turning point in the UAE’s transformation into a digital asset enterprises’ “Oasis.”

In addition, new financial activities like digital asset brokers, custodians, and platform operators have been added to the UAE’s Financial Activities Rulebook. The RAK Digital Property Oasis, the world’s first free financial zone dedicated only to digital property and digital enterprises, was announced by Ras Al Khaimah (RAK) in February. For service providers of digital assets and cryptocurrencies operating in developing industries like Blockchain, NFTs, DApps, DAOs, and Web3-related endeavours, this free zone will offer a specific area.

RAK Digital Property Oasis Chairman Sheikh Mohammed bin Humaid bin Abdullah Al Qasimi said, “We are building the free zone of the future for the businesses of the future.” “As the world’s first free zone exclusively devoted to digital and digital asset firms, we look forward to supporting the ambitions of entrepreneurs from all over the world with our innovative, supportive, and fast-to-adapt approach and our innovation-enabling environment,” said the chairman.

Except for assets listed on official digital asset platforms operated by operators licenced by the SCA or other appropriate authority, Article 3 of the statutes forbids trading in digital assets in the United Arab Emirates. While Article 5 covers their responsibilities in seven areas—operational efficiency, resilience, integrity, transparency, professional conduct, digital asset safety, compliance, discipline measures, systems and procedures, and access regulation—Article 4 describes the roles of digital asset platform operators. While Article 7 describes the procedure for bringing complaints against SCA decisions, Article 6 gives the SCA the authority to request information or documents from operators of digital asset platforms.

Enterprises requesting local licences clearly demonstrate the UAE’s growing influence in the bitcoin space. As an illustration, in November 2022 Abu Dhabi International Markets (ADGM) gave in-principle approval for a cryptocurrency licence to CAPEX.com, a well-known retail trading brand. Similar licences were previously obtained by Kraken, eToro, SEBA Bank, Binance, and Crypto.com.

With its resolute efforts to establish itself at the forefront of the digital asset industry, the UAE has created a plethora of potential to lead the world in digital asset technology and serve as a central centre for transactions involving digital assets.