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Dubai's Virtual Asset Regulations to Attract Crypto Firms, Investors

Dubai has released licensing and authorization requirements for virtual asset companies and issuers looking to operate in the emirate.

Photo by ZQ Lee / Unsplash

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Dubai's crypto sector has been given a boost with the release of a detailed regulatory framework by Virtual Assets Regulatory Authority (VARA), the emirate's crypto regulator, on Tuesday.

Its compulsory rulebooks cover compliance and risk-management standards for sector companies, as well as requirements on cyber security norms, market conduct and more.

There are also seven activity-specific rulebooks covering issuance, advisory, custody and exchange services, and more, as well as a specific rulebook for token issuance.

Greater clarity

VARA said the regulations aim to "position Dubai as a regional and international hub for Virtual Assets and related services and to develop a digital economy in the city to boost its competitive edge locally and internationally"

"The VA Framework is structurally designed to offer regulatory certainty – allowing the market to have greater clarity on the expected level of operator responsibility," the regulator said in a statement.

Set up just last year, VARA has committed to developing Dubai as a hub for virtual asset players, and its crypto-friendly policies are luring major players in the space, including Singapore crypto exchange Bybit, which said it will open its global headquarters in Dubai, and, which announced it would build a regional hub there.

Binance received a minimum viable product license in Dubai in September, and Coinbase, Huobi, and Kraken also operate there.

Related: UAE Could Be Next Crypto Hub as Bourses Expand to Dubai

“We think the rules will stand head and shoulders above the rest,” VARA chief executive officer Henson Orser told Bloomberg.

To handle the expected influx of applications –  estimated at 300 until the end of the year – VARA is set to quadruple its headcount this year from 20 currently, the publication reported on Tuesday.

No Privacy Coins

Among the emirate's new rules is a ban on "anonymity enhancing crypto," or privacy coins.

VARA said such tokens are "a type of Virtual Asset which prevents the tracing of transactions or record of ownership through distributed public ledgers and for which the [Virtual Asset Service Provider] has no mitigating technologies or mechanisms to allow traceability or identification of ownership."

Its marketing regulations also apply not just to licensed VASPs but all market participants, saying marketing must be "fair, clear, not misleading" and not imply that investments are "safe, low risk" or that decisions are "trivial, simple, easy".