Dubai’s VARA Introduces New Crypto Rules For 2023

The Digital Assets Regulator of Dubai, the Virtual Asset Regulatory Authority (VARA) has issued new guidelines for the trade of virtual assets in Dubai. A comprehensive virtual assets trade framework has been created that will focus on the aspects of cross-border financial security and economic sustainability. 

VARA was hopeful that this new framework will hinder terrorist financing and money laundering while providing clear guidelines to potential investors. There are different kinds of virtual assets like Cryptocurrencies, NFTs, digital tokens, etc. and the UAE has been pushing itself as a hub for the digital economy. This will bring in multiple challenges too in the form of money laundering and terrorist financing which the Emirate administration is trying to deal with an iron hand.

VARA is a unique prospect in the digital asset environment of Dubai

The operator responsibility involved in the trade of virtual assets needs to be charted out clearly as this will instill more confidence in digital investors.

The current regulatory norms aim to do exactly that by creating a broader rulebook revolving around the trade of virtual assets. The licensed institutions inside the Emirates will be provided with anti-money laundering standards and high-quality risk assurance as part of the new regulations. 

Helal Saeed Almarri, Director General of Dubai’s Department of Economy & Tourism, and Chairman of VARA’s Executive Board said that the UAE economy’s future will be dependent on various new age digital innovations like metaverse, web 3.0, blockchain, etc.

The D33 Economic strategy will be possible through the efficient application of these new digital environments into the business structure of Dubai. The introduction of VARA in the first quarter of 2022 was intended to bring in a shift in the digital market of Dubai. It has now created the first virtual asset framework in the world designed for boosting the digital economy of Dubai and to provide a sustainable and stable market based on global standards. 

The new initiative reflects the overall commitment of the UAE to set up efficient safeguards against the possible threats inside the global digital economy. It also shows the nation’s unbridled confidence in designing a properly structured virtual asset ecosystem that imbibes the ideals of a next-generation digital innovation. As VARA is the sole authority across Dubai for regulating VA trade, it will work towards facilitating investor protection, jurisdictional resilience, and economic stability. According to the new guidelines, seven activities have been licensed under the VA trade. They are: 

1. Custodial services
2. Exchange-based services
3. Payments and Remittance Services 
4. Broker-Dealer services
5. Advisory services 
6. Lending-Borrowing services
7. Virtual asset management and investment services

Together with these, the issuances are also a regulated activity so that the people who buy virtual assets can make a more informed decision.

The new token that is going to be launched in Dubai comes under careful consideration and it is important that a buyer has a complete idea of the obligations involved in the trade. 

This will also apply to the existing MVP operational license applicants and holders, legacy Virtual Asset Service Providers (VASPs), and also for prospective market entrants. The VASPs offering virtual asset services before the publication of the FMP regulations have to re-register with VARA and they need to be completely compliant with the rules of the regulatory body.

The services that break these rules will be subjected to regulatory action by the VARA executive body. These new regulations were a breath of fresh air for the crypto community and experts in the field said that they are excited to see a new phase for the digital asset industry being headed by the Dubai administration. 

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These new additions will make Dubai the number-one choice for digital market investments and asset expansion on a global scale. The progressive and efficient system put up by the Emirate city would facilitate global crypto companies to create fully compliant blockchain applications that will be used for economic expansion in the region.

The new vision of Dubai to become an entirely smart economy through the application of digital industry tools such as cryptocurrencies and blockchain aligns itself with the larger goal of shaping a sustainable economy.

There will be new economic opportunities opening up as a site for virtual-oriented business ventures and digital currency transactions that fosters a new era in the global business and investors domain. 

Other countries like the U.K., South Korea, and European Union are also planning to set up their own regulatory provisions for digital asset management as last year’s market crash-landed a lot of high-profile digital assets exchange and lending companies in deep trouble.

A regulatory body would act as a support for these assets in case they face similar threats in the future. Developed nations have realized the importance of this and have started investing in constructing a jurisdiction-based Virtual Asset Framework that will serve their economic needs.