The Virtual Assets Regulatory Authority (VARA) of Dubai announced a detailed framework of regulations put in place to function as a set of guidelines for businesses and individuals functioning in the virtual assets industry.
The new set of regulations and policies are developed in a way that ensures that the top businesses and talents from all around the world operating in the industries related to crypto and another web 3.0 technologies are attracted to Dubai, thus taking forward the United Arab Emirates as a global hub for not only trade and tourism but for modern next-gen technologies as well.
New VARA Guidelines to Prevent Fraud, Improve Investor Confidence
According to VARA, the basic agenda behind the newly announced regulations is to ensure that virtual assets trade within the country does not result in money laundering activities nor fund any sort of illegal or terrorist activities. Moreover, such regulations will also give the required clarity and details for investors potentially interested in backing such web 3.0 firms.
Cryptocurrencies as well as digital tokens that can be traded (for example NFTs) are considered to be virtual assets in the UAE.
In recent times, the UAE, especially Dubai has become a hotspot for crypto-related businesses. In fact, according to the data from the Dubai Multi Commodities Centre (DMCC), there were 3,049 newly registered businesses in the UAE in 2022, out of which over 500 businesses were startups operating in the crypto space.
Owing to the growing license applications and related service requests, VARA now aims to increase its current workforce by at least 4x times.
The UAE’s commitment to fighting against terrorism financing and money laundering activities, which have become quite commonly seen with respect to the virtual assets industry, as well as the keenness of the country to position itself as a hub for the virtual economy is what made the country a popular destination for crypto businesses from around the globe.
Speaking at the announcement of the new regulations, Helal Saeed Almarri, Chairman of the Executive Board at VARA, and the Director General at the Dubai Department of Economy and Tourism said “As per the Dubai D33 Economic Plan, our mission is to establish Dubai as the capital destination for activities related to future economies such as the Metaverse, Web 3.0, blockchain, and artificial intelligence.”
He also said, “When the Virtual Assets Regulatory Authority (VARA) was established in Dubai back in Q1 of 2022, it was the only independent regulator in the whole world operating in the virtual assets space, and the motivation was to function as an accelerator to the growth of the future of the digital economy.”
“As we’re reaching the first anniversary since the launch of VARA, the newly announced first-of-its-kind framework for virtual assets further solidifies the goal to create a sustainable, secure, and growing marketplace for virtual assets.”
The set of regulations announced by VARA extensively covers activities seven of the licensed activities related to virtual assets in the UAE, which are:
- Management and investment services related to virtual assets.
- Advisory services.
- Custodial services.
- Borrowing-lending services.
- Remittance and payments services.
- Dealer/Broker services.
Moreover, there are also guidelines that need to be followed to ensure that companies or individuals that engage in activities related to virtual assets follow the regulatory rules and have cybersecurity-related and risk-management protocols set in place to ensure the protection of the assets.
Industry experts call the new virtual assets regulations put in place by the UAE a welcome move, especially after the collapse of the FTX exchange back in November of 2022. Several industry leaders also expect that will offer much more confidence for investors and a growing space for businesses in operating in the sector.
Speaking about the new regulations with Arabian Business, Mahin Gupta, founder of “Liminal”, said that he and his team are excited to see the United Arab Emirates growing towards implementing a mature set of regulations and guidelines for the virtual assets industry. The new regulations, implemented at a federal level, will surely make the UAE the prime choice for virtual assets companies from all around the world who are looking to expand their operations.
In fact, Gupta’s own “Liminal”, a company that is currently based in Singapore and operates as an infrastructure platform for digital wallets, has plans to expand its operations into the UAE in the near future, considering the latest steps by the government aimed at developing the virtual assets niche industries in the country.
Other companies are also joining the bandwagon to expand their virtual assets business in the UAE.
Notable among them is the Abudhabi-based “Venom Ventures” with plans to make $1 billion in investment within various web 3.0 projects within the country.
By the year 2030, the Dubai government aims to attract over 1000 companies operating in the Metaverse and blockchain domain into the country, thus bringing in over 40,000 virtual jobs as well as over $500 million into the country’s economy.