The United Arab Emirates (UAE) has taken a major step towards regulating the virtual asset sector with the announcement that the Securities and Commodities Authority (SCA) will begin accepting licensing applications from firms that provide virtual asset services.
The move comes after the UAE’s Cabinet issued resolution number 111 of 2022, aimed at regulating virtual assets and creating an attractive investment environment for global companies and institutions operating in the virtual assets sector.
According to the SCA, all virtual asset service providers operating in the UAE must obtain a license from the regulator, with the exception of those licensed in the country’s financial-free zones.
Companies operating within the emirate of Dubai must also comply with the virtual asset services authority (VARA) and obtain a license from VARA.
Failure to comply with the new law could result in financial fines of up to 10 million AED ($2.7 million), disgorgement of profits, and criminal investigation by the public prosecutor.
The SCA has undertaken the task of regulating and supervising the virtual assets sector in accordance with the cabinet resolution. The regulator aims to protect investors’ funds in virtual assets from illegal practices.
The resolution applies to all transactions related to virtual assets for investment purposes, including those in non-financial free zones.
However, the provisions do not apply to virtual assets used for payment purposes, as they fall under the jurisdiction of the Central Bank.
