Dubai Regulates Virtual Assets: Cease-and-Desist Orders Issued
On Wednesday, Dubai’s Virtual Assets Regulatory Authority (VARA) announced that it has imposed cease-and-desist orders and fines on seven entities operating without the necessary licenses and breaching marketing regulations. This decisive action is part of VARA’s effort to maintain the integrity of the virtual assets market in the emirate. However, the authority did not disclose the names of the companies involved in this enforcement action.
VARA emphasized the importance of avoiding unlicensed firms, noting that engaging with such entities could expose individuals and institutions to substantial financial and reputational risks, including potential legal repercussions for regulatory infractions.
Details of the Fines Imposed
The fines levied range between AED 50,000 (approximately $13,612) and AED 100,000 (around $27,225), depending on the severity and nature of each violation. This enforcement decision marks a significant move for Dubai, a city that has aimed to present itself as a leading hub for cryptocurrency businesses.
Recently, Dubai was recognized as the top global destination for crypto enterprises in 2024, attributed largely to its well-defined regulatory framework, absence of capital gains tax, and reasonably priced licensing fees. This accolade underlines Dubai’s commitment to cultivating a welcoming environment for virtual asset services while carefully monitoring compliance.
Virtual Asset Compliance and Licensing Requirements
Dubai’s robust approach to crafting a crypto-friendly landscape makes these regulatory measures particularly notable. For any entity wishing to provide virtual asset services within or from Dubai, acquiring a license from VARA is essential. This requirement encompasses various activities, including Virtual Asset Issuance, operation of Trading Platforms, and Custody Services.
Companies must first apply for Initial Approval to begin their operations before proceeding to secure a full Virtual Asset Service Provider (VASP) license. Moreover, all entities are mandated to adhere to specific regulatory standards tailored to their outlined activities. Notably, Virtual Asset Custody Services must operate independently from other business activities, and firms engaged in proprietary trading may qualify for a No Objection Certificate (NoC) instead of a full license, provided they meet established conditions.
New Marketing Regulations Coming into Effect
As of October 1, 2024, VARA has also implemented stringent marketing rules for virtual assets, which apply to both local businesses and international firms targeting Dubai residents. These new regulations aim to eliminate misleading marketing practices while promoting transparency and fairness in the promotion of virtual asset services.
This proactive measure is designed to protect consumers and bolster the credibility of the virtual asset market in Dubai, aligning with the emirate’s overarching vision of becoming a reputable global center for digital finance.