On Monday, the federal authority for securities in the United Arab Emirates started to accept applications from virtual asset service providers (VASPs). According to the announcement, all crypto companies or as stated the virtual asset providers that are willing to function in the county must apply for approval with the Securities and Commodities Authority (SCA).
However, the service providers which are already licensed in the country’s financial free zones need not do this. The UAE free trade or free financial zones extend facilities to non-resident corporations, like the convenience of single-window administration, and 100% ownership. There are about 44 free zones situated all over UAE that have attracted foreign direct investment in the form of 200,000 companies.
On Monday, the licensing regime was approved by the SCA following a decision by the UAE Council of Ministers which came last year to regulate the crypto sector. The SCA took on the role of regulating the sector earlier this year.
Sources reveal that amongst the seven emirates, some already have licensing frameworks for crypto firms in place including Dubai and Abu Dhabi. Notably, in the case of Dubai, the local industry is embracing the region’s recently unveiled regime. According to the announcement, companies willing to operate in the Emirate of Dubai must have a license from its Virtual Assets Regulatory Authority (VARA) in addition to SCA approval.
In addition, the announcement states that the firms seeking authorization will be required to exhibit “operational efficiency and flexibility,” and meet operational standards rules for a set of standards.
There have been several amendments to the virtual asset rule book from the previous year. Financial activities like brokerage and custody of virtual assets, along with a new category of virtual asset service providers, have been added to the legislation. As the regulation states:
A person wishing to engage in virtual asset activities shall have headquarters in the State to conduct his business, according to one of the legal forms approved by the local authorities concerned with commercial licenses.
The UAE has been intending to rise as the crypto hub and provide a safe space for companies to expand. Todayq News reported last year that the UAE received the most attention as the Gulf region’s cryptocurrency market increased exponentially in the past year.
Thani Al-Zeyoudi, minister of state for foreign trade, said that crypto would play an important role in UAE’s global trade in the coming days. In the context of policies, the minister suggested that while working on the regulatory regime for crypto, UAE authorities are also focussing on making the country a hub with substantial crypto-friendly policies that ensure sufficient protection to the investors.
However, irrespective of their usual advocacy, the nation is also concerned about the gray list of the Financial Action Task Force (FATF). The gray list refers to the countries with strategic Anti- Money Laundering and Countering the Financing of Terrorism (AML/CFT) deficiencies. The UAE authorities are consistently making efforts to clear their name from this infamous list and the recent licensing regime seems to be a step in the direction.