How To Get The Crypto License In Dubai 2023 – Cost And Benefits
The cryptocurrency Industry and the world around it are rapidly expanding and a lot of people are now coming forward and showing interest in crypto trading. To do cryptocurrency trading one needs to make a lot of investments.
Dubai is one of the emerging hubs for technology and innovation and it is one of the preferred destinations for crypto traders. In this article, we will discuss how to get a Crypto license in Dubai in 2023.Do you know how to get the crypto license in dubai?Then you must need to go through this article.
The main purpose of writing this article is to offer a detailed guide on how to get a crypto license in Dubai, the process to apply, the costs and documents needed for the application, and several types of crypto licenses.
What is Crypto?
Cryptocurrencies are the visual currency that uses advanced cryptography concepts for security and operations. All the cryptocurrencies leverage a decentralized network that is not backed by any centralized authority such as any company or the government.
All the transactions happening using cryptocurrencies are stored in a decentralized manner on the distributed ledger also known to be blockchain. One of the most popular cryptocurrencies is Bitcoin and since its launch, a lot of cryptocurrencies have emerged such as Ethereum, ripple, Algorand, Solana, and many more.
Cryptocurrencies are well known for their transparency, security, and transaction speed. The way how cryptocurrency transactions happen is quite commendable. Also, cryptocurrencies are known to be hedged against rising inflation.
Benefits of crypto trading
There are a lot of benefits of Crypto trading such as 24/7 trading, cheaper and faster transactions, the ability to trade from anywhere around the world, and access to the global market. Cryptocurrency trading also offers security and user anonymity that makes it one of the attractive choices for traders to trade in.
Moreover, cryptocurrencies are completely decentralized and distributed, unlike other asset class it is not controlled by any centralized authorities such as institutions and governments. The transaction fee for each trade is quite low hence, it is considered to be one of the attractive options for small-scale to large-scale businesses.
All cryptocurrencies utilize blockchain as the underlying technology that makes them immutable and transparent. Once the transactions are recorded on the blockchain it is tamper-proof and cannot be altered.
Lastly, it has also opened doors to different opportunities giving them access to the decentralized market all across the globe.
Is crypto trading allowed in Dubai?
Yes, of course, Cryptocurrency trading is allowed in Dubai, but the Central bank of the United Arab Emirates( UAE) does not regulate it.
However, the central bank and (DFSA) are still working on it and it has been drafted. It is expected soon, DFSA would release a regulatory framework for the same in upcoming years.
While they introduce regulations, DFSA has introduced a license for digital assets trading to one of the companies, and in the future, they are looking to issue more licenses to other companies as well. Although it is not officially regulated it is not banned.
Any company that is looking forward to conducting cryptocurrency trading should take a license so they comply with all the regulations and international laws. It is also suggested to take advice from financial and legal experts before initiating any trading activity.
What are the types of cryptocurrency licenses in Dubai?
As we discussed in an earlier section, DFSA( Dubai Financial Services Authority) issues different licenses for Digital Assets Trading in Dubai. Some of the key licenses issued by the authority are following.
Virtual Asset Services Provider License – This is a specific license handled for companies who are looking forward to providing services for virtual asset trading such as a cryptocurrency exchange or custodian services
Companies need to have certain procedures and policies to be taken for the complaint to any Anti Money or terrorist Funding Laws and regulations. Moreover, they should also ensure the security and safety of the customers’ holdings.
Virtual Asset Custodian Service provider – The companies who wish to offer custodian services to customers need to take this license. The Objective of this license is to safeguard the customers and ensure that there is no sort of terrorist funding or money laundering happening.
Virtual Asset Service provider – Limited (VASP-L) – This is issued to companies who want to engage in limited services such as custody services, exchange, or trading. This license needs comparatively less regulatory requirements fulfillment than the VASP license.
Virtual Asset Business Consulting Provider (VAB-C) License: it is for companies who want to engage themselves in Virtual asset trading services such as custody, exchange, or trading depending upon the compliance and regulatory requirements.
🛑 You should note that these licenses are offered to only a few companies and the process is really difficult and time-consuming. Hence it is advisable to contact a legal consultant and experts to guide you through the process.
Why should you get a crypto license in Dubai in 2023?
There are several reasons why you should go for the crypto license in Dubai in 2023. Some of the reasons are listed below.
- Competitive Advantage – if your company has a crypto license in Dubai, then you have a competitive edge over others who do not have got a license yet. A lot of customers prefer to use platforms that are legally compliant with a license.
- Aligned with Government goals– Dubai Government is known to be the hub for technology advancements and innovations. Having a license issued by them showcases how your company is committed to supporting the local ecosystem.
- Enhances the market Access– Getting a license from the Dubi government can offer you more opportunities in the crypto and blockchain space. Also, you can engage with other companies in the ecosystem.
- Access to huge Customer Base– Regulated firms by the government usually attracts more customers as they are considered to be trustworthy among unregulated firms. And most of the customers feel safe using your platform.
- Legal Recognition – Getting a crypto license in Dubai would help you to legally operate in the Dubai market and provide a certain level of trust and credibility to the customers.
How to apply for a crypto license in Dubai? (Step by step instruction)
The process to acquire a crypto license involves a lot of steps. The key steps are outlined below.
👉 Get advice from compliance and legal experts – before you apply for a crypto license in Dubai, you should consult with legal and compliance advisors to help you with understanding the complete process and ensure that you satisfy all the legal and regulatory requirements.
👉 Attain knowledge about all the types of crypto licenses – The DFSA offers multiple crypto licenses in Dubi such as VASP-L, VABC, VACSP, and VASP. Each crypto license has unique requirements and you need to know which one is suitable for you.
👉 Design a proper Business Plan – The DFSA needs a proper business plan before processing your application for the license. It should outline all the internal controls, management structure, and the company’s operation. Your business plan should be able to showcase the company’s ability to regulate the requirements responsibly and ethically.
👉 You should submit an application form to obtain a license in Dubai. The form can be easily downloaded from the DFSA website. You should submit and pay the application fee for the same.
👉 Undergo a review process: After the application is successfully submitted, the DFSA would begin the process of application review to ensure that it meets all the requirements and comply with legal regulations. They might also need some additional information while processing your application.
👉 GO for one site inspection: After the Application is successfully reviewed, the DFSA team would conduct an onsite inspection to ensure that all the information provided related to your company’s controls, processes and system is compliant with all the regulatory requirements.
👉 Obtain the license: After DGFSA is fully satisfied with both the application form and onsite inspection, they will issue you a license.
👉 Maintain the License: After getting a license, your job does not get over, you need to ensure that you comply with all the latest regulatory requirements and if in case there is any change in the company’s management or operation, you should inform DFSA.
While you undergo this process ensure that it is a quite time-consuming and complex process. Hence it is always advised to take guidance from experts and accordingly plan further steps.
Documents required to apply for a crypto license in Dubai?
The DFSA requires crypto license seekers to submit certain documents as a part of their crypto license application. Some of the common documents needed are listed below.
- Business plan
You need to submit a business plan that explains the management structure, internal controls, and operations of your company. This will ensure that your company fulfills all the regulatory requirements.
- Incorporation Document
This requires you to submit the company’s article of association, the company’s memorandum, and a few other necessary documents related to your corporation.
- Control and Ownership Structure
The DFSA needs a complete structure and ownership plan for the company including the personal information of any controlling parties or beneficial accounts.
- Background Checks
The DFSA needs to do background checks for the senior management and the company’s directors and if needed few other company individuals. The background check would help them to know if any bankruptcies or criminal records are there.
- Regulatory Compliance
The DFSA needs you to be compliant with Counter Terrorism Financing and Anti Money Laundering regulations. This includes the detailed layout of CTF and AML policy and a few other relevant complaint documents.
- Financial Statements
A company applying for the Crypto License needs to provide the financial statements of the last three years along with the auditor reports.
- Insurance Coverage
The company also needs to get insurance coverage for its customer’s assets and the company’s operations.
- Other documents
Based on the license that you are trying to obtain, you may require to submit some additional documents like details of all the digital assets, IT systems and Controls, and a few other relevant information.
Things To Be Considered Before Obtaining The Crypto License In Dubai
Quite a few things that you need to consider before obtaining a crypto license are the following.
- Cost: Obtaining a crypto license is not cheap, you need to get several regulatory and compliance requirements, an application fee, and much more.
- Reputation: The crypto license would help you to enhance your company’s credibility. If your company fails to comply with any of the laws and regulations, your reputation would damage. Hence before applying for the crypto licenses ensure that you have all the documents indeed.
- Adaptability to any future changes: the cryptocurrency regulatory environment is constantly evolving, and becoming stricter in the coming time, hence you should have enough resources and ability to adapt to any such changes.
- Cyber Security: You should have security systems designed properly that protect customers’ data and digital assets. Companies should build a strong foundation of their security protocols and measures to ensure customers are safe while using their platform.
- Regulatory Compliance: Getting a crypto license in Dubai needs you to have a complaint with regulations and laws. Two of the important regulations are CTF and AML. Before you apply for a license ensure that you have all the complete policies regarding the same.
How much time will it take to obtain a crypto license in Dubai?
There are different factors on which crypto license in Dubai depends, such as the type of application you are applying for, the company’s compliance with rules and regulations, and much more. On Average, it can take up to months. The initial review of the application after you submit might take several weeks to complete.
After the application is reviewed and approved there would be an onsite inspection which can take much longer (up to weeks) to ensure that all your business control are compliant with regulatory needs.
Taxation of crypto trading in Dubai 2023
As per the current taxation policy, there is no specific framework for taxation on any cryptocurrency activity. UAE does not impose any tax on companies or individuals for holding or trading cryptocurrencies. But you should also note that with time, the regulations are changing and in the future, you might need to pay taxes based on the upcoming development.
However, it is difficult to predict regulations hence it is advised to seek guidance from tax experts to ensure that you are well-versed with the tax regulations and compliant with them. There is a possibility in 2023, they might introduce a tax on cryptocurrency trading.
How much does it cost to get a crypto license in Dubai?
The cost of getting a license in Dubai highly depends on the type of license you want to get based on the size of your company and a few other key factors. The DFSA charges an application fee when companies or individuals apply.
The application fee is non-refundable and a one-time fee that covers the initial application review and document check. Further, there are some costs associated with legal experts’ consultation and policy acquisition for CTF And AML. It is quite essential to consider all the costs before you apply for a crypto license.
In conclusion, we think you get an idea about how to get the crypto license in Dubai and obtaining a crypto license in Dubai can be a great move for your company, if you want to offer digital asset services. Dubai has got one of the great environments for crypto-related business and the government is also quite supportive. The process for obtaining a license can be quite complex and time-consuming. If you are looking to obtain a license in Dubai in 2023, then you can consider all the points mentioned above.
Frequently Asked Questions
1. What types of crypto licenses in Dubai are there?
2. Are there any taxes on digital asset trading in Dubai?
3. How long does it take to get a crypto license in Dubai?
4. How much does it cost to obtain a crypto license?
5. What should be considered before you apply for a crypto license in Dubai?
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