Cryptocurrencies have recently attracted widespread attention and acceptance in the international economy. Little does Dubai know that, emerging on the digital financial horizon’s horizon, it has sort of become a player of this global financial card game! The authorities have also acknowledged the urgent need to develop the regulatory system against the background of dramatic changes in the virtual asset market.

The frameworks are designed to protect investors, foster innovation, and maintain the stability of the financial system. In this post, we take a closer look at the cryptocurrency UAE legal framework to outline significant legislative progress and the responsibilities of key regulatory authorities.

Cabinet Decision No. 112/2022 Explained: Assigning Regulatory Responsibilities

This policy has been further established through Cabinet Decision No. 111 of 2022 and Cabinet Decision No. 112 of 202,2, which explicitly devolves certain virtual asset-related regulatory powers onto the Dubai Virtual Assets Regulatory Authority (VARA). In particular, Article 2 grants VARA the power to license and regulate virtual asset-related activities in Dubai and its free zones.

Moreover, VARA has to make regulatory determinations, ensure compliance with data protection regulations, and adopt anti-money laundering (AML) standards, as well as educate investors on virtual asset investments and risks. In addition, VARA establishes a process for service providers to disclose and report vulnerabilities, consolidates fees and commissions, applies sanctions for breaches, and disputes in relation to administrative sanctions.

3 of the Law also stresses the importance of close coordination between VARA and the SCA to bring about consolidated surveillance, powerful control, and fair spread of charges and levies. This framework is a critical component of cryptocurrency control in uae, setting the legal framework for cryptocurrency in uae legal issues.

Cabinet Decision No. 111/2022: Virtual Assets Regulation in the Cryptocurrency UAE Legal Framework

Drawing on Under Cabinet Decision No. 111/2022, the UAE is now one of the most aggressively regulated regimes of virtual assets and their service providers around. Let’s start from the top, however, the terms “virtual assets,” “virtual asset service provider,” and the “Competent Authority” (the SCA – the Securities and Commodities Authority) are all clearly defined in Article 1. 

For the future, Article 4 sets strict licensing conditions, demanding that any party participating in virtual asset activities, including but not limited to operating platforms, providing exchange, trading, transfer, or custody services, should get the approval and be licensed by SCA and the local relevant authorities.

Article 6 also specifies SCA’s basic duties to monitor virtual asset activities, make policy decisions, secure data, and collaborate in Anti-Money Laundering (AML) efforts.

Articles 8 through 10 seek to align the UAE AML laws with international standards by requiring service providers to be in compliance with both UAE AML laws as well as international standards, namely those set forth by the Financial Action Task Force (FATF).

Moreover, Article 11 prescribes licensing and service fees, whereas Article 12 provides for various sanctions in case of breach (from formal warnings to a fine amounting to AED 10 million).

This regulatory landscape is one that further clarifies that cryptocurrency is legal in UAE applications and supports cryptocurrency UAE legal compliance, leading to more trust and transparency within the cryptocurrency UAE sector, which is growing and changing quickly in the UAE.

Establishing the VARA Grievance Committee: Dubai Administrative Decision No. 1/2023

In line with the regulatory framework of Dubai, Dubai has officially constituted the Virtual Assets Regulatory Authority (VARA) Grievance Committee as a significant part of the ecosystem through Administrative Decision No. 1/2023. This committee is responsible for appeals concerning acts, penalties, or sanctions instituted pursuant to that legislation.

Furthermore, it relates to objections made on the basis of the investigations conducted by VARA-certified inspectors or made in conformity with the regulations applicable.

As a part of the wider cryptocurrency UAE legal framework, the committee introduces increased accountability and offers a framework through which disputes within the virtual asset industry are resolved.

Conclusion

A new brief on the UAE Cryptocurrencies. The UAE has done much to introduce a clear and comprehensive cryptocurrency law. By Cabinet Decisions No. 111/2022 and No. 112/2022, the government authorized major regulators such as VARA and the SCA to regulate virtual asset services, impose licensing, anti-money laundering (AML) and other regulations, and safeguard the rights and interests of investors.

In addition, the establishment of the VARA Grievance Committee following Administrative Decision No. 1/2023 helps with accountability and offers a more formal mechanism to solve conflicts.

Together, they validate the legality of cryptocurrency in the UAE and demonstrate the country’s efforts to establish a safe, transparent, and innovative digital asset market.