On February 28, 2022, the Emirate of Dubai enacted Law No. 4 of 2022 on the Regulation of Virtual Assets (“VAL”) and established the Dubai Virtual Assets Regulatory Authority (“VARA”). By establishing a legal framework for businesses related to virtual assets, including crypto assets and non-fungible tokens (NFTs), this landmark law reflects Dubai’s vision to become one of the leading jurisdictions for entrepreneurs and investors of blockchain technology.
VAL excludes activities related to virtual assets in the Dubai International Finance Centre (DIFC) from its scope of application. The DIFC, a prominent free zone within the UAE, has its own regulatory framework for virtual assets under the jurisdiction of the Dubai Financial Services Authority.
VAL defines (1) “virtual asset” as a “digital representation of value which can be digitally traded or transferred or used as an exchange or payment tool or for investment purposes” and (2) “virtual token” as a “digital representation of a group of rights which can be issued and traded digitally through a virtual asset platform (a platform operated by a virtual asset provider licensed by VARA)”.
Key features of VARA include (without limitation):
- VARA will have legal status and financial and administrative autonomy, with an independent and juridical capacity to protect and regulate the stakeholders in virtual asset services. VARA will be affiliated with the Dubai World Trade Centre Authority.
- VARA is responsible for regulating, supervising and overseeing the issuance, offering and relevant disclosure processes of virtual assets and NFTs.
- VARA will cooperate with other federal agencies, including the UAE Central Bank, issue a code of ethics, general policy, and strategic plans, and be in charge of the enforcement of VAL. VARA will not, however, regulate services related to virtual assets on a federal level. An entity that breaches VAL may be subject to certain penalties and fines, including withdrawal of VARA’s authorisation for six months.
- Any natural person or legal entity offering virtual asset services can only do so if it is (1) granted a license from VARA, (2) operating in the Emirate of Dubai, and (3) has a trade license from the relevant commercial authority in Emirate of Dubai. VARA’s mandate includes monitoring trading activities in virtual asset services to prevent price manipulation and establish high standards of protection of personal data.
- VARA is expected to issue implementing decisions on the implementation of VAL, including a description of relevant activities, exempted virtual assets, procedures for licensing and associated fees and charges, virtual asset custodians, digital wallets, and tokenization and trading.
VAL became effective on March 11, 2022, upon its publication in Dubai’s Official Legal Gazette.
FAQs
On February 7, 2023, VARA issued its Virtual Assets and Related Activities Regulations 2023 (the “Regulations”) applicable to all virtual assets service providers. VARA is an independent regulator for virtual assets, and regulated virtual assets include cryptocurrencies such as Bitcoin and non-fungible tokens (NFTs).
Is cryptocurrency regulated in Dubai? ›
The center of the crypto universe has been shifting toward Dubai since March 2022, when the UAE announced the world's first independent crypto regulator: the Virtual Asset Regulatory Authority.
What is the new virtual assets law in UAE? ›
The new Virtual Asset Regulations set out a list of criteria for the 'accepted virtual assets' that the SCA will oversee. The 'accepted virtual assets' list reflects similar measures that were introduced by regulators in the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market.
Are NFTs regulated in Dubai? ›
With regard to specialized domestic jurisdictions, such as the DIFC, no regulations exist specifically addressing NFTs. The DFSA (Dubai Financial Services Authority), DIFC's internal financial regulator, has recently instilled an overhauled 'crypto asset regime' to regulate investment tokens and their markets.
What are considered virtual assets? ›
Virtual assets (crypto assets) refer to any digital representation of value that can be digitally traded, transferred or used for payment. It does not include digital representation of fiat currencies. Virtual assets have many potential benefits and dangers.
What are examples of virtual assets? ›
The most common example of a virtual asset is virtual currency such as Bitcoin, Litecoin, Ethereum or Dogecoin. Gaming tokens, non-fungible tokens (NFTs) and governance tokens might also be considered virtual assets, depending on the circ*mstances and the context in which the assets exist and are used.
Why is Dubai crypto-friendly? ›
The UAE's Crypto-Friendly Environment:
The introduction of Dubai's comprehensive market regulations and the establishment of the Virtual Assets Regulatory Authority (VARA) have bolstered the country's reputation as an attractive jurisdiction for crypto companies.
Is Dubai a crypto-friendly country? ›
Is Cryptocurrency Legal in Dubai? The Central Bank of UAE* has not licensed cryptocurrencies or recognized them as legal tenders. However, there are no prohibitions against crypto assets and they can be traded on crypto exchange platforms. UAE citizens can own cryptocurrencies, and deposit and trade them.
Who needs crypto license in Dubai? ›
Under the VARA legislation, to establish a business in cryptocurrencies the investors must have to acquire a crypto trade license in Dubai. With a Crypto license in UAE, businesses can trade and sell cryptocurrencies, tokens, and more.
What is the new rule in Dubai 2023? ›
UAE Visa Extension New Rules - 2023
The new rules state that travellers can extend their visit visas for 30 and 60 days for additional 30 days from within the nation. The maximum number of days one can stay in the country in a year is 120 days, so you can not extend your visa over this period.
New corporate tax law
Effective from the financial year starting on or after June 2023, businesses in the UAE will be subject to corporate tax, which will impose a standard rate of 9 per cent on taxable profits exceeding Dhs375,000.
Is Cryptocurrency legal in UAE 2023? ›
The UAE has adopted a progressive approach towards cryptocurrencies. While not considered legal tender, cryptocurrencies are not banned, and the regulatory framework is evolving. Abu Dhabi Global Market (ADGM) and the Dubai Multi Commodities Centre (DMCC) are instrumental in shaping the crypto regulatory landscape.
Does Dubai tax on crypto? ›
Let's discuss some of the prominent advantages: The biggest benefit to buy and sell crypto in Dubai is the Crypto gain tax, which is currently ZERO. Looking towards the future, it is unlikely to exceed 5% even after 5 years.
How is crypto currency regulated in the UAE? ›
In order to operate a cryptocurrency business within the DIFC, companies must obtain a license from the DIFC Authority. The process for obtaining a license includes a comprehensive assessment of the business, its management, and its operations.
Are NFTs regulated in the US? ›
Currently, an offer to sell one or more NFTs is not directly or explicitly regulated by the U.S. federal government, unless it is a “security” under the traditional Howey test, in which case the Securities and Exchange Commission (SEC) is likely to consider the NFT an “investment contract” and regulate it.
Is virtual office legal in Dubai? ›
A virtual licence is a legal permit issued by the Department of Economy & Tourism in Dubai (DED) in Dubai to companies that do not have physical premises in the city or state.
What is Dubai law 27 of 2007? ›
Law No. 27 of 2007 on Ownership of Jointly-Owned Properties in the Emirate of Dubai (the “JOP Law”) came into force on 1 April 2008. The Law laid the foundation for a regulated and transparent regime concerning the management of strata developments and ownership of Units in Dubai.
Is virtual office legal in UAE? ›
While it is true that illegal virtual offices might be cheaper, in the long run, you will only get more trouble than convenience. It would even be wiser to get a small office space for rent in Dubai rather than get into illegal activities. Having a virtual office itself is not illegal.
What is the Dubai law 16? ›
The new Dubai Law No. 16 of 2011 now provides commercial entities with the option to resolve their disputes before the Courts of the Dubai International Financial Centre ("DIFC").
