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UAE Takes a Decisive Step Towards Being a Crypto Hub

UAE's Federal Tax Authority has made the bold move to exempt virtual assets from VAT but is it enough to turn the region into a sustainable crypto hub?

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Virtual assets and investment fund management are no longer subject to value-added tax, according to an updated version of the Executive Regulation of Federal Decree Law released on October 2 by the UAE Federal Tax Authority (FTA).

The adjustments made in response to a Cabinet decision are effective November 15 this year.

These revisions attempt to align with previous revisions to the Decree-Law and other applicable tax laws, clarify important clauses and processes, and provide more information.

According to the new law, which pertains to financial services, management of investment funds, ownership and transfer of virtual assets, including cryptocurrencies, and conversion of virtual assets, would not be subject to value-added tax.

The exceptions regarding virtual asset conversion, transfer, and ownership went into force as of January 1, 2018.

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The UAE determined that a variety of activities were free from VAT last week, including the exchange of digital assets, such as digital currencies, the storage and oversight of virtual assets, and the transformation of virtual assets.

The UAE's moves are an effort to boost the development of such innovative regulatory systems.

Moving away from the United States, where clarity is still lacking, and towards India, where a 30 per cent tax has effectively driven offshore activity, other nations have adopted alternative approaches.

However, market participants can rest easy knowing that the United Arab Emirates is still unrivalled in digital assets.

Recent research from Henley&Partners places the UAE atop this year's crypto adoption Index, placing it in the top 12 nations for both public adoption and technological innovation.

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The research cites the UAE's low-tax jurisdiction as an appealing environment for crypto enterprises, which is a key factor in the country's crypto growth.

The UAE is second only to the United States in terms of popular adoption of cryptocurrency. Surprisingly, no other Arab nation made it into this year's top 12.

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According to the Index, the UAE is a top destination for cryptocurrency investors, with many in the Emirate interested, and already invested in digital assets.

A robust startup environment and solid government assistance are in sync with this level of excitement.

The latest tax exemption will add to its allure for crypto investors looking for places to invest in digital assets.


Elsewhere

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WisdomTree users will be able to access the WisdomTree Government Money Market Digital Fund (WTGXX) to fund their WisdomTree Prime Visa Debit Card
VanEck Launches New Crypto Fund to Fuel Innovation
The launch of VanEck Ventures further solidifies the investment manager’s position as a leader in the digital asset space.
Hong Kong Plans to License More Crypto Exchanges By Year-End
Hong Kong’s SFC has said that eleven crypto companies awaiting VATP license decisions are already operating as “deemed to be licensed”
Taiwan’s Financial Regulator to Launch Digital Asset Custody Pilot in 2025
This initiative aims to provide a safe and regulated environment for banks to offer custody services for cryptocurrencies and other digital assets.
FBI Creates Its Own Crypto Token to Target Market Manipulators
FBI backed token NexFundAI was used to catch market makers that offered services to artificially pump up crypto prices

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