UAE launches crypto business licensing program first passed into law in January. The new regime imposes minimum capital requirements and anti-money laundering rules. It does not apply to economic free zones or to Dubai, which is regulated by the Virtual Assets Regulatory Authority.
Crypto businesses interested in operating in the UAE may now apply for a license from the Securities and Commodities Authority. Firms must comply with corporate behavior norms such as honesty, transparency, consumer asset protection, and limiting the trade of particular items to specified consumers under the new licensing regime, which was authorized by the SCA’s board of directors.
New UAE Rule Requires Minimum Capital Reserves
The new rule identifies digital asset business operations that need a license under Article (5), including brokerage, custody, platform operation, and virtual asset service providers.
Article (6) empowers the SCA to request further documents from cryptocurrency firms. Article (7), on the other hand, mandates minimum capital requirements, mandating enterprises to follow the Financial Action Task Force’s anti-money laundering principles. The UAE is now on FATF’s gray list, which means it is subject to increased scrutiny.
Except for economic free zones and Dubai, the SCA license rules apply to all emirates in the UAE. It gives local financial hubs like Abu Dhabi flexibility in their licensing processes. In order to operate in Dubai, cryptocurrency companies must register with the Virtual Assets Regulatory Authority (VARA).
UAE Set to Establish Digital Assets Free Zone
Sheikh Saud bin Saqr Al Qasimi, a member of the UAE Supreme Council, recently established a free zone dedicated to digital assets.
The Ras Al Khaimah Digital Assets Oasis is tied to the UAE’s newly formed Department of the Future. It will launch in the second quarter of 2023, attracting metaverse, blockchain, NFT, DAO, and other Web 3 companies.
The SCA will work with the central bank to enforce the new rules, which take effect on January 15, 2023. The SCA criteria were influenced by the UAE Cabinet Decision No. (111) of 2022, which was announced at the end of last year.