Dubai: A Global Hub for Virtual Assets
With its pioneering and innovative approach to regulating virtual assets and virtual asset service providers, the United Arab Emirates (UAE), and Dubai in particular, has firmly established itself as a global centre for virtual assets, setting new standards in the industry.
In 2024, the cryptocurrency market is rebounding from a severe decline brought on by the failure of FTX Trading Ltd. in 2022. Bitcoin’s reaching all-time highs in November is a beacon of hope, proving that virtual asset values are setting new milestones and the market is resilient. Since its inception, Bitcoin has continuously increased after each of the four US presidential elections, never reverting to its pre-election levels, underscoring the influence of the polls on its price dynamics.
By establishing the Virtual Asset Regulatory Authority (VARA) in 2022, Dubai made a significant move, especially when other major jurisdictions were slow to act. VARA’s role in regulating virtual assets and service providers is crucial, and its influence is felt across Dubai’s mainland and free zones.
Except With the exception for the Dubai International Financial Centre (DIFC), which is governed by the Dubai Financial Services Authority (DFSA),f VARA is the exclusive regulator for virtual assets and virtual asset service providers (VASPs) throughout the mainland and free zones of Dubai. Nearly two dozen organizations have received licenses from VARA to offer virtual asset services since its founding. Hundreds of other businesses are at different stages of the licensing process, according to discussions.
New Rules
As a responsible regulator, VARA seeks to balance giving service providers regulatory clarity and protecting consumers from information asymmetry. To assure compliance, VARA has adopted extensive new laws on the marketing of virtual assets, which are backed by hefty fines, underscoring the gravity and seriousness of these regulations.
VARA’s marketing rules for virtual assets are stringent and apply to domestic and foreign businesses targeting Dubai. Only VARA-licensed organizations or agents of a VARA-licensed VASP can market virtual assets. Notably, the marketing of virtual assets that enhance anonymity is strictly prohibited.
Marketing initiatives must follow rules that demand equity, transparency, openness, and the proper disclosure of risks. Any incentives—financial or otherwise—must be approved by VARA beforehand.
These regulations come with significant fines of up to AED 10 million for each violation. Given the strict requirements, it’s crucial that individuals and organizations dealing in virtual assets and aiming to enter the Dubai marketplaces fully understand and strictly adhere to these rules. Building strong UAE-UK trade partnerships can also be instrumental in navigating the regulatory landscape effectively. Seeking expert counsel is highly recommended. Seeking expert counsel is highly recommended.
Please contact us immediately at GERAI LTD with any questions.
Giorgi Kurtsikidze
https://gerai.co.ukMy mission is to provide client-focused legal solutions and services through flexible, value-driven approaches by leveraging technologies to anticipate the needs of those existing and potential clients I serve in a manner that adheres to the highest standards of excellence and integrity in the field of Business Law.